Technical analysis: key levels for gold and crude

Gold looks set for further upside, after completing a head and shoulders rally. However, Brent crude looks likely to turn lower once more, amid a short-term bounce. 

Gold rallies after short-term head and shoulders

Gold managed to break higher from a short-term head and shoulders pattern, with the price rallying into the upper Bollinger band. The breakout above $1252 points towards a move out of the immediate downtrend, with further upside likely.

However, given the extension away from the 20 day simple moving average (SMA) – the middle Bollinger band - there is a good chance we could see a retracement lower today. Such a move is likely to be temporary in nature, with further upside likely before long. We would need a break below $1240 to negate the bullish outlook.

Brent looks set for further short-term weakness

Brent sold off yet again yesterday, following a brief retracement.

We look to be seeing something similar here, with the possibility that the price will head back towards the lower bounds of its recent range, at around $61.50. An hourly close below $62.36 would provide greater confidence of this move. Until then, there is still a chance of further short-term upside.

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