Technical analysis: key levels for gold and crude

Gold pushes lower despite short resurgence last week, while the weekend’s production cut agreements between both OPEC and non-OPEC members has driven a sharp appreciation for the price of crude. 

Gold bars
Source: Bloomberg

Gold continues to descend

Gold has been turning lower since hitting the $1180 region on Thursday, with the wedge break crucially failing to push through the $1181 region.

Subsequently we have seen price moving lower in a very considered and steady manner. With price passing through $1157, the downtrend in play over the past month remains intact, with further losses expected.

We would need to see an hourly close above $1181 to negate the current downtrend and until then, rallies will be seen as opportunities to get short once more.

Brent jumps after production deal

Brent Crude has gapped higher at the open of trade, following an agreement within non-OPEC producers to cut output. We are seeing price break to a new high currently, with the 15-minute chart giving us more clarity over early price action. This break means we have now seen a 16-month high, and a long-term inverse head and shoulders created, where the next major resistance level comes all the way up at $69.24.

While that does not mean we will go immediately there, it provides the basis for a potential bullish trending market for the near-term. As such, a bullish outlook is in place, with the continued creation of higher highs and higher lows the key to a trending market forming. As long as price remains above $56.73, then price should continue to rise.

WTI on the rise

Similarly, WTI has managed to gap higher at the open, with price continuing to rise. As long as we see price remain above the lows of $54.29, then further gains seem likely.

However, a move below that level could bring a gap close situation into play.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.