Technical analysis: key levels for gold and crude

Both gold and Brent are trading within a close proximity of key resistance levels, which will go far in determining where the next move is for both commodities. 

Oil pipes
Source: Bloomberg

Gold consolidation provides long opportunities

Gold is trading within a symmetrical triangle formation this week, with the price essentially retracing since Monday’s gap higher at the open. Even if we break lower from this triangle, the key here is whether we see the price remain above the $1241 support level. Should that occur, another leg higher would seem likely.

It is worth noting that the price remains close to the $1264 resistance level, which, if broken, would lead to a bullish medium term outlook to match the shorter term uptrend. An hourly close below $1241 would spark a strong chance of a period of weakness for gold.

Brent back to crucial resistance level

Brent has managed to rally back into the 16 March high of $52.72, following on from a period of strength. A break through this level would be hugely important, as it would complete a double bottom formation, pointing towards significant gains.

Looking at the long term picture (weekly chart) showing that we remain within an uptrend, it was always likely to be a bullish bottoming out at some point above $44.11. Should this mark a bottom, it would be a relatively shallow pullback, falling short of the 61.8% retracement. Ultimately, today will be dictated by the reaction to this resistance level, with the ability to break and hold the price action above $44.11 key to determining whether we are set for further upside, or some sort of pullback.

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 IG 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.

Find articles by writer