Technical analysis: key levels for gold and crude

Crude continues to soar, as gold finally manages to stem the sharp sell-off that has dominated recent weeks.

Gold bars
Source: Bloomberg

Gold looks to reverse bearish outlook
Buyers have managed to stem the rout for gold today, with the approach towards the 100-day simple moving average ($1214) evidently encouraging some to go long. However, it will need a close back above $1235, and ideally $1240, to reverse the current bearish outlook.

Rallies have been the cue for selling, and since we haven't seen a noticeable bounce since 19/20 May, this current move may also simply be viewed as a selling opportunity. A move below $1214 targets $1200 and then $1190, and then down towards $1163.

Gold daily chart

Brent shows continued strength
The move above $50 will bring out revised forecasts for oil prices, but with long weekends looming in the UK and US, and overbought conditions on the daily chart, the risk now lies primarily to the downside.

A real dip would be viewed as a buying opportunity, either to initiate new positions or add to existing longs, so weakness over the weekend would be no bad thing. A continuation of gains through $51 would then head towards the Sept/Oct 2015 high at $54.10.

Brent daily chart

WTI continues upward trend
The picture is similar here for WTI, with overbought conditions militating against the possibility of a significant move to challenge the late 2015 highs at $51.10.

Even a significant retracement to $46 would still be within the longer term uptrend, so shorts have to be aware that the path of least resistance is still upwards. Beyond $51 the next areas to watch are $53.40 and then $57.

WTI daily chart

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