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Technical analysis: key levels for gold and crude

Gold has dropped into a crucial support level, yet could the sell-off be short-lived? Meanwhile, Brent is turning lower once again after the recent rebound.

IG Analyst

Publication date : 2018-10-29T10:06:48+0000

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Gold challenging critical support level

Gold has managed to break lower from a rising wedge formation, with the price now challenging the crucial $1228 support level this morning. A break below that level would point towards further downside coming into play.

Interestingly, with the 61.8% retracement of the wider move ($1218-1243) coinciding with that $1228 swing low, there is a strong chance of a rebound from here. While it would provide us with flatlining lows on the shorter-term intraday trend, it would also represent a wider retracement without actually needing to break from this shorter trend. Should we break below there, the 76.4% retracement ($1224) would be the next key support level. However, ultimately, we would need to see a break below $1218 to negate the uptrend in play throughout October.

Gold chart

Gold chart

XAUUSD-4-hours-2018_10_29-09h09_LRG

Brent turning lower from trendline resistance

Brent managed to rally into trendline resistance on Friday, with the price now starting to reverse lower from the confluence of Fibonacci (50%) and trendline resistance.

The downtrend seen throughout October remains in place, with the $75.56 level representing the next major hurdle to overcome. With that in mind, it makes sense to look out for a potential leg lower from here, with a break below that support level pointing towards a continuation of this downtrend.

Brent chart

Brent chart

Brent chart

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