Technical analysis: key levels for gold and crude

Gold resurgence under scrutiny as it reaches the top of a multi-year wedge pattern. Meanwhile, both Brent and US crude continue to consolidate as we await a breakout for direction.

Gold
Source: Bloomberg

Gold rally under question

Gold saw a strong move lower over the last two days of last week, bringing into question the strength we have seen of late. The crucial thing to note here is that last week’s highs are around the top of a multi-year wedge pattern and thus unless a bullish breakout is going to occur it seems likely that the sellers will return once more.

For this bearish view to come into play, we would need to see a close back below $1115 support. Below that, $1113, $1110 and $1108 would be key.

The $1108 level in particular would be crucial, as a close below there would create a double-top formation. However, until we see some sort of bearish shift, this gradual move higher can persist, with $1128 the key resistance level in view. 

US crude within wide consolidation

US crude has been trading within a wide consolidation range over the past two trading days. This would point towards further gains given the trend coming into this current move.

Given the doji candle from just above the key $33.18 support level, it seems likely we will see some upside, if only to resume this range. However, a closed hourly candle below $33.18 would be a warning sign, given that it represents the completion of a double-top formation.

Should that occur, this would bring support levels of $32.70 and $32.12 into view. 

Brent continues to lead the way higher

Brent continues to lead US crude, pushing higher this morning from the 50-hour simple moving average. On this market, there is a clear symmetrical triangle formed and thus it makes sense to await a breakout and closed hourly candle above the first key level out of the pattern.

Thus a closed hourly candle back above $36.10 would be an important bullish signal, with $36.74, $37.02, $37.68 and $37.82 the key resistance levels.

Alternately a closed hourly candle below $35.02 would point towards further losses, with support at $34.52 and $33.70 in view. 

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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.