Technical analysis: key levels for gold and crude

Gold looks set for further downside after a break below key support within a period of consolidation. Meanwhile, Brent continues to consolidate following a breakout. 

Gold tracking trendline after decline below key support

Gold managed to break below the $1320 support level yesterday, providing greater confidence that we will return to the lower half of the multi-month range in place for gold.

For the time being, the price is tracking a descending trendline, which forms the lower boundary of a falling wedge pattern. This points towards a potential wider retracement coming into play before long. However, until we break above the $1326 level to signal the beginning of that retracement, another leg lower towards the crucial $1306 level looks likely before long.

Brent continues to consolidate after breakout

Brent remains in consolidation mode following on from its breakout into a three-year high last week. We are seeing the price falter around the same $74.26 level respected last Thursday, bringing about the potential for an intraday head and shoulders formation.

However, unless we see a break below $70.47, any such short-term downside would be seen as a buying opportunity. As such, it makes sense to look for long positions either on the breakout through $74.77 or at a Fibonacci within a retracement of the $70.47-$74.77 rally. 

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