Technical analysis: key levels for gold and crude

Gold is breaking higher, yet a major trendline could stop it in its tracks. Meanwhile, a bounce in crude could be short-lived as it runs into a trendline of its own.

Gold mining
Source: Bloomberg

Gold rallies into major trendline resistance

Gold received a welcome boost on Friday from a weak payrolls figure, which negated the potential bearish implications of a flat-lining bottom at $1259. The break through the $1274 high meant that the uptrend remains intact. However, we have since seen the price rally into a crucial long-term descending trendline originating in July 2016. That provides us with a crucial hurdle to overcome for the day. Considering the strength of the rally and the importance of this trendline, there is a good chance we could see gold weaken for the short term.

For that bearish short-term view to come into play, we would need to see the price turn lower from here and post an hourly close below $1279. Alternately, a break higher through the trendline would point towards a continuation of the recent uptrend.

Brent turning lower after brief rally

Brent is turning lower from trendline resistance following a rally from Friday’s low of $48.98. Typically we have seen the price move lower from the 50-hour and trendline resistance confluence.

As such, further downside looks likely from here, to conform to the recent downtrend. A break below $49.92 would give greater confidence that this is coming to fruition. Alternately, an hourly close above $51.45 would point towards a bullish breakout from this recent downtrend. 

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