Technical analysis: key levels for gold and crude

Gold uptrend runs into crucial long term resistance, while crude has shown some signs of weakness within recent uptrend.

Gold bars
Source: Bloomberg

Gold gains ground, yet resistance worth considering

Gold has seen another sharp move higher, in a continuation of the risk-off move that has been dominating the markets over the past week. The overnight retracement has been very shallow, moving into the 23.6% pullback and trendline support this morning. Should this mark the low of the morning, it would be a particularly bullish sign.

However, looking at a wider perspective, we are moving into an interesting long term resistance zone. The 76.4% retracement of the November 2016 high ($1337) to December 2016 low ($1123) coming in around the current price, at $1287. Alongside that major resistance level, we also have a crucial long-term descending trendline to contend with (currently $1291). As such, while we have a clear uptrend in place, this major area of resistance is worth noting as a potential roadblock to end the week. With that in mind, watch out for the continued creation of higher highs and higher lows. A break from that trend could be a signal that this long term resistance area is going to have an impact on shorter term price action. Until then, the uptrend remains in place.

WTI breaks trendline support

WTI has seen its uptrend come into question this morning, with the price falling below the trendline support and the 50-hour simple moving average (SMA). That could be the first sign that this market is turning lower.

The key thing we would need to see for such a bearish outlook to come into play would be a break below the $53.01. Should that come to fruition, then a short intraday head and shoulders formation would be completed, pointing towards a stronger move lower. Until then, the uptrend remains in place.

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