Technical analysis: key levels for gold and crude

Gold begins to show signs of a resurgence, in an attempt to regain the bullish mantra that has dominated the first-half of 2016. Meanwhile, crude selling intensifies as Brent breaks through trendline support.

Oil plant
Source: Bloomberg

Gold rally could signal start of resurgence
Gold has managed to gain ground this morning, following a failed attempt to break below last week’s $1310 low. That is the first piece of the jigsaw, with a break through $1334 providing the signal that this sell-off is likely to be over.

For now, we have both trendline and simple moving average (50-SMA) resistance to contend with. A bullish view remains in play, with initial signs pointing towards a recovery coming into play. This bullish outlook remains unless we see an hourly close below $1303.

Brent breakout looks set to continue
Yesterday’s rebound to $46.22 proved a fleeting move higher before the selling ramped up. Surprisingly, we saw a sharp deterioration through trendline support. Given that move, it is likely that we will see further downside to come.

As such, given the momentum evident in this market, it makes sense to simply play the trend based on the notion of lower highs and lower lows. Thus as long as price remains below the overnight high of $45.30, a bearish view is in play.

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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.