Technical analysis: key levels for gold and crude

Gold strength and crude weakness remains in play as we look for the next legs in these clearly defined trends.

Gold bars
Source: Bloomberg

Gold finds new higher support
The strength of gold was highlighted yesterday, as price broke through an absolutely crucial resistance level at $1191. This provide a bullish medium to long-term view for gold given that we have now broken up out of a falling wedge and taken out the first swing high resistance level.

Looking at the shorter-term, there is a clear new base being created here which provides confidence of another move higher. As such, as long as we do not see a closed hourly candle below $1205, a bullish view is held for another leg higher. The next major resistance level of note is $1232.

US light sells-off from SMA once more
US light upside has been hard to come by recently and the gains seen late last week seem to be the best oil bulls will get, with selling soon coming back into play. The past two days have seen the 50-hour simple moving average (SMA) provide resistance to any extended move higher and that is worth bearing in mind should any bounce occur.

However, for now, it seems likely we will see another move lower, with a close below $28.35 providing that bearish signal. A lack of recent levels to the downside means we will be watching out for whole numbers as potential support, with $28.00 the next in view. A closed hourly candle above $30.48 would be required for the bearish view to be questioned.

Brent has key support level in sight
Brent has been creating a clear topping pattern, be it a head and shoulders or double top. Ultimately it means the same thing, with the creation of highs and higher lows, turning into lower highs and lows.

The key level to watch for the day is $30.50, where a closed hourly candle below this level should provide the spark for another leg lower in Brent. Alternately, look out for short-term intraday bullish reversal signals to highlight whether we will see any resistance to the likely next leg lower. 

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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.