Technical analysis: key levels for gold and crude

Gold looks to be coming back into favour, but will we see Fibonacci resistance send it lower once more? Meanwhile, a Brent triangle means we await a breakout for direction.

Mining
Source: Bloomberg

Gold breaking higher from trendline support

Gold has proved a tricky customer over the past 24 hours, with an initial break through triangle support failing to last, sending price higher. The subsequent break through the trendline and $1234 resistance has provided a more bullish picture. However, it is the respect of the triangle top as new-found support, which makes things look more bullish. The price has since rallied to the 76.4% retracement at $1238, which will be key to determining whether we are set for a bearish turn lower or not.

A strong rally through $1238 would provide a lower chance of this recent downturn persisting. However, with gold having broken out of an upward channel, there is a chance we could see a deep retracement within a bearish reversal. Ultimately, a reversal lower from here would point towards a good chance of the market being within a near-term top, while a break through $1245 would signal a resumption of the uptrend.

Brent trading within triangle formation

Brent is trading within a symmetrical triangle formation, set within a wider range. Given that we are seeing this pattern within the middle of a range, it makes sense to take our lead from the breakout.

An hourly close above $56.42 (bullish) or below $55.75 (bearish) would be the key signal for our near-term bias. That being said, remember that the wider range will dictate the state of play, and thus any break higher or lower could be short-lived.

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.