Technical analysis: key levels for gold and crude

Gold takes a breather in its strong ascent this week. Meanwhile, crude continues to trade with a triangle formation.

Oil plant
Source: Bloomberg

Gold rally slows

The strong rally in gold has eased somewhat, with a pullback to $1360 looking like the potential backstop to this retracement. Ultimately, we remain within a clear uptrend and as such, the bullish view still holds.

A break and hourly close below $1360 would provide a more neutral bias, yet until that happens a move back to and through yesterday’s high of $1375 seems likely.

Brent rallies from key support level

Brent continues to trade within a descending triangle formation, with yesterday seeing the rally having sold into the triangle bottom. Given this trend, it seems likely that we will see another move higher to continue this pattern.

However, that bullish view is only short-term, with a closed hourly candle above $50.83 required to mark a bullish breakout. Of particular interest is the opportunity to short Brent once more around $50.00, which is a big psychological level, alongside the 76.4% retracement. However, until then, another leg higher seems likely today.

US crude triangle set to continue

US crude is also trading in what looks like a descending triangle formation, with yesterday’s rally coming from the mid-June low of $46.30. Given that clear rejection on the lower bounds of this pattern, a move into the upper threshold seems likely, with another leg higher seemingly on the cards.

However, much like Brent, we are looking for potential shorting opportunities around $48.86, which marks both the 76.4% retracement and November 2015 peak. As such, a short-term bullish view for a move into the $49.00 area is followed by a bearish view for a resumption of this triangle pattern. An hourly lose above $49.66 or below $46.00 would signify the breakout from this pattern.

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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.