Technical analysis: key levels for gold and crude

OPEC deal provides boost for crude, yet with a wider trend of lower highs in place, will we see Brent and WTI push higher yet?

Oil barrels
Source: Bloomberg

Gold falling after overnight rally
Gold rallied into the 76.4% retracement overnight, as the OPEC deal pushed for a risk-off tone to markets. However, with gold having created yet another lower high, the bearish outlook remains in play for a break back below $1318.

We are currently around halfway into the triangle pattern that has been in play over the past three months. As such, further downside is justified on the wider timeframes too. Thus a bearish view remains in play unless we see an hourly close back above today’s high of $1326. 

Gold daily chart

Brent breaks higher from one triangle into another

Brent has rallied out of the short-term ascending triangle that has been in play over the past week, with a push above $48.66 particularly notable.

While this provides a bullish outlook, it is worth noting the wider descending highs originating from mid-August. A bullish breakout from this would come with an hourly close above $50.25. However, with price having retraced into the $48.66-48.82 support zone today (12 and 23 Sept peaks), there is a good chance of a bounce from here.

A break below this level could provide us with a sharp pullback, given the overbought stochastic and respect of the recent ascending trendline resistance. However until that happens, another bounce is preferable, where a move above $50.25 would be required to provide a longer-term bullish outlook. 

Brent daily chart

WTI pulls back from trendline resistance

WTI is also pulling back marginally following a rally into a convergence of two notable trendlines. So far the pullback has been minimal, however, should we see Brent break below $48.66, we would likely see WTI move lower too.

The reliance on Brent for our support comes from the fact we have less notable levels to the downside in WTI.

However, once again, we are clearly exhibiting lower highs from a wider perspective and that means we would need to see a break and hourly close above $48.12 to negate the idea we could see US crude start to weaken before long. 

WTI daily chart

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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.