Technical analysis: key levels for gold and crude

Gold continues to consolidate at a crucial support zone, whereas Brent is gaining ground as it attempts to break out of the downtrend in place over the past month.

Gold bars
Source: Bloomberg

Gold consolidates at key support

Gold has failed to resolve the question of whether this downtrend is going to stay the course or reverse at a crucial confluence of support. That support zone is formed by utilising a long term ascending trendline (dating back to 2015) and the 76.4% retracement of the March-April leg higher.

So far we have seen the price respect the $1226 resistance level to the upside. As such, for a more bullish outlook to come to fruition, we will need to see the price break $1226 and subsequently $1236. Conversely to the downside, we will be looking for an hourly close below $1214 to point towards a resumption of this recent downtrend.

Brent paving the way for possible wider recovery

Brent managed to break and close above $50 yesterday, thus providing a bullish view for the short term. So far that has worked out well, with the price gaining ground since. Interestingly we have seen a push through the 76.4% retracement and trendline resistance this morning too, which is a sign that perhaps this short term recovery could have legs. For that to be confirmed, we would need to see an hourly close above $52.16. 

Watch out for the April low of $51.00 as potential resistance in the near term. With the stochastic hitting trendline resistance, after a push into the most overbought level in a month, it is worth noting that we could see some form of pullback soon. However, that could be fleeting, with a break below $48.54 needed to confirm a continuation of the downtrend in place over the past month.

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