Technical analysis: key levels for gold and crude

With gold showing signs of weakness and crude turning higher once more, the recent trend looks to be back on the cards.

Oil pipeways
Source: Bloomberg

Gold turning lower, yet is the retracement over?

Gold has been turning lower following a deep retracement past the 76.4% level over the past three trading days. Yesterday’s failure to create a new higher high in the afternoon was a telling sign that the bounce could be over and so we have seen the price of gold fall as a result.

There is still a story over whether we are simply creating a new higher low here, with a break back below $1128 required to put that idea to bed. Until then, a bearish outlook remains in place unless we break through $1145, with a break below $1127 providing greater confidence of this view.

Brent turning higher once more

Brent crude is turning in our favour, following a retracement of the rally from $53.00. With that level intact, this pullback seen last week simply provided us with a good entry price. The head and shoulders pattern completed on Friday paved the way for gains into the next key resistance level at $56.15, which has held for now.

However, with a retracement into the 50% Fibonacci seemingly over, we look likely to break higher from here, as long as we push convincingly through $55.55.

An hourly close above that level would point towards a rally into and above $56.20, with the next target at $57.53. We would need to break back below $53 to negate this bullish view.

WTI breaking higher once more

WTI similarly retraced heavily, yet the failure to break below $50.30, followed by the creation of an inverse head and shoulders has pointed towards the resurgence we have been waiting for. With price currently breaking higher from a symmetrical triangle formation, it seems likely that we will see further gains come into play.

Near-term, a break through $53.26 and in particular $53.56 would point towards a strong move higher, with $55.07 the next major resistance. A bullish outlook remains in place unless we see price break back below $50.30.

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.