Technical analysis: key levels for gold and crude

Gold is somewhat serene, yet oil is at absolutely crucial levels with the potential for a bounce higher from major support in US crude.

Oil pipeways
Source: Bloomberg

Gold drops lower

Gold continues to grind lower, with the 20-period simple moving average providing clear near-term resistance. Given the clear downtrend in play throughout the past month, further downside seems likely, driven in large part by US dollar strength and December rate hike expectations.

However, the key to gold going forward is going to be the $1077 level, which if broken would create a new five-year low. For now, gold looks bearish unless price moves back above $1096, which would then look towards $1098 and $1105 resistance.

However, downside is expected following the doji candle this morning, with the July low of $1077 the next major support level.

Gold

US crude bounces from support

Yesterday saw another leg lower for Oil - US Crude, with price coming back to the crucial $43.58 support level (January low) and bouncing perfectly on the level.

The $42.03-$43.58 support zone has been the source of almost every major move higher over the past two-and-a-half months and with that in mind, there is a distinct possibility that we could see yet another strong move higher from here.

The creation of a new higher low followed by a move back above $44.24 would be a bullish indicator for a strong move higher, with $44.43, $45.03 and $45.58 the initial resistance levels in play.

We would need to see price close below $42.03 to point towards another strong move lower.

US Crude

Brent below key support

Brent has managed to break back below $47.03 which is a major support level over the past two months. This is a bearish move and while price remains below $47.03, the chart will remain bearish.

Given the potential for a bounce in US crude, we would need to see Brent close back above $47.03 to see any bullish sentiment across both charts. We have seen a new higher low established and will await the response to $47.03.

A close above $47.03 would look for a bullish bounce with $47.62 and $48.33 as near-term resistance. A close back below $46.39 would look for a continuation lower, with $45.23 the next major downside level.

Brent crude

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa 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. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.