Technical analysis: key levels for gold and crude

Gold pauses for a breather following a sharp rally which keeps our medium-term bull view intact. Meanwhile, in Brent, the creation of a double-top looks to signal the end of its recent resurgence.

Gold bars
Source: Bloomberg

Gold rally halts

Yesterday’s rally in gold came off the back of a similarly sharp downturn last week. The overall wider bullish view remains in play and as such we were looking for longs despite recent weakness. Certainly the $1338 neckline break was a strong signal yesterday, with price coming back to retest this level following the breakout.

We have since seen a strong move higher, with price currently consolidating from an overbought position. It does not make much sense to add any new positions from here unless we receive a signal that a pullback is not in the offing.

As such, an hourly close below $1351 would point towards a more protracted move lower, with an hourly close back above $1355 needed to provide a resumption of the uptrend.

Brent double-top points to losses

Brent has formed a double-top formation following the strong move higher in recent days. This points towards the potential for this uptrend to be under pressure and such, further losses seem likely from here.

An hourly close above $45.23 would be required to negate this view. Watch out for support levels at $44.13 and $43.59, whereas resistance would be found at $44.82, $45.23 and $45.89. 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.