Technical analysis: key levels for gold and crude

Gold looks set for further upside after a recent rally. Meanwhile, Brent’s gains could come under pressure, amid potential head and shoulders formation.

Gold
Source: Bloomberg

Gold pausing after yesterday’s gains

Gold managed to rally through trendline and horizontal resistance, following on from the wider 76.4% retracement, paving the way for a possible return to the $1366 highs before long.

For now, the question is whether we will retrace a decent amount of the $1337-$1351 rally. There is a good chance that we will instead see the price respect near-term trendline support, with a break through $1351 highlighting an end to this current pullback. Ultimately, as long as the price remains above the $1337 level, a bullish view is in play.

Brent rally comes under pressure

Brent has been rebounding following the drop into $68.03 earlier in the week. The ability to break through $70.85 will be key to determining whether that failure to maintain higher lows is a bearish signal or not.

Until that happens, there is a chance we are creating a head and shoulders formation, where $70.11 represents the peak of the left shoulder.

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