Technical analysis: key levels for gold and crude

Both crude and gold gain ground after recent losses. Will these moves be fleeting or more long-lasting?

Oil pump
Source: Bloomberg

Gold falls into key support zone

Gold has been selling off in a very consistent manner of late, and, despite overnight gains, it would make sense to look for the same again. However, it is worth looking at this from a longer term perspective, at which point an ascending trendline (dating back to 2015) and the 76.4% retracement come into play. Since the turn of the year, gold has been trending upwards. For that to be negated, a break below $1195 would be required.

As such, there is a chance that we could see this market begin to turn around from here. For that to come into fruition we would be looking for a break through $1236. For now, gold is utilising last week’s lows of $1226 as resistance. This is accompanied by the 50% retracement. Watch that level as near term resistance. Yet it would not be a surprise to see the price move into a more bullish phase, with the $1236 level key to that. Until then, a break back below $1214 would point towards the market potentially ignoring this support zone and continuing its descent.

Brent regaining ground after sell-off

Brent’s losses were swiftly reversed last week, with the price bouncing up to retrace some of the preceding downside. However, we are now seeing signs that this could be something more long-lasting than a short-term retracement. That is because of the higher low and potential for a break into a new high.

As such, the $50 mark is going to be crucial here, with a convincing break through that level pointing towards the possibility of a more long-lasting rebound. Until then, there is a chance we could just be looking at a short-term rebound amid a wider sell-off. 

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