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Technical analysis: key levels for gold and crude

Gold is trading around a crucial support trendline, while Brent downside brings about a heightened chance of a significant pullback coming into play.

IG Analyst

Publication date : 2018-06-05T09:42:22+0100

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Gold continues to respect trendline support

Gold is consolidating around a trendline dating back to December 2016. This could easily resolve in another push higher, even if such a move was part of a wider retracement into the 61.8% or 76.4% pullback of the $1326-$1282 downturn.

Ultimately, with a long-term trend of higher lows in place, there is a good chance we will see gold turn higher once more rather than break the $1236. Whether we build on the 61.8% retracement ($1262) seen last month comes down to the ability to remain above that level. Should that be possible we would need to turn higher in the near future. With trendline support clearly playing a part in current price action it makes sense to anticipate a potential rally from here. Conversely, a break back below trendline support would heighten the chance of a wider retracement into $1266.

Gold chart

Gold chart

Gold chart

Brent falls towards critical support level

Brent has been selling off strongly since peaking at the 76.4% retracement last week. That rebound needed to break above $80.49 to signal a continuation of the wider uptrend. However, with the subsequent sell-off we are seeing a strong chance of a longer-term period of downside.

For confirmation, we need to see a break below $74.52, thus confirming the creation of lower highs and lows. As such, watch for the ability or inability to break and hold below $74.52 as a signal of where we go from here.

Brent chart

Brent chart

Brent chart

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