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Technical analysis: key levels for gold and crude

Commodities diverge, as gold and crude turn higher. Given the influence from the impending oil producers meeting, there is reason to believe we will continue to see crude dictated by news, whereas gold will be influenced by the dollar.

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Gold bars
Source: Bloomberg

Gold rallying after trendline break

Gold is managing to claw back ground lost over the past week, with the overnight trendline break providing the first clue that we could be due a rally.

With price currently at the key $1330, it looks likely that we will take on the $1332 level once more before long. The ability to post an hourly close above $1332 on the short-term would point towards a stronger move higher, where $1335 and $1340 represent the next resistance levels.

That being said, with price rallying from around halfway into a wider range, there is a good chance that any bounce is simply a short-term phenomenon before we move lower once more.

Brent tumbles after IEA warning

Another day, another warning regarding the continued market imbalances. This time the IEA has noted that we are currently seeing demand fall, which follows on from yesterday’s OPEC warning of rising non-OPEC supply.

This has provided us with a sharp move lower for the pair, at a time when fundamental announcements are playing an increasing role in price action. The hourly chart shows that we seem to have turned a corner for Brent, with Friday’s break below $48.33 providing a lower low, which was followed up by a lower high established yesterday.

As such, we are looking for a move back below yesterday’s low of $47.08 to continue the recent turnaround, where $46.38 represents the next support level of note.

WTI selling off after reversal signals

WTI is also selling off after a new lower high and lower low since Friday. This provides us with confidence that further losses are around the corner, where $45.16 represents the next key support level of note.

A break and hourly close below there would subsequently look towards $44.92 and $44.19 as the next support levels. This bearish view would be negated with an hourly close back above $46.92.

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