Technical analysis: key levels for gold and crude

Both gold and Brent are trading within a close proximity of key resistance levels, which will go far in determining where the next move is for both commodities. 

Oil pipes
Source: Bloomberg

Gold consolidation provides long opportunities

Gold is trading within a symmetrical triangle formation this week, with the price essentially retracing since Monday’s gap higher at the open. Even if we break lower from this triangle, the key here is whether we see the price remain above the $1241 support level. Should that occur, another leg higher would seem likely.

It is worth noting that the price remains close to the $1264 resistance level, which, if broken, would lead to a bullish medium term outlook to match the shorter term uptrend. An hourly close below $1241 would spark a strong chance of a period of weakness for gold.

Brent back to crucial resistance level

Brent has managed to rally back into the 16 March high of $52.72, following on from a period of strength. A break through this level would be hugely important, as it would complete a double bottom formation, pointing towards significant gains.

Looking at the long term picture (weekly chart) showing that we remain within an uptrend, it was always likely to be a bullish bottoming out at some point above $44.11. Should this mark a bottom, it would be a relatively shallow pullback, falling short of the 61.8% retracement. Ultimately, today will be dictated by the reaction to this resistance level, with the ability to break and hold the price action above $44.11 key to determining whether we are set for further upside, or some sort of pullback.

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.