Technical analysis: key levels for gold and crude

Recent weakness for both gold and Brent has provided potential buying opportunities, with upside expected from here.

Gold
Source: Bloomberg

Sharp sell-off in gold brings us back to key support

Gold dropped sharply yesterday, with the price moving back into the initial swing low of $1275. This is accompanied by the wider 76.4% retracement, and as such we have greater importance attached to that region.

With that in mind, there is a good chance we could see the price move higher from here, where a break back below $1275 would be a warning sign that this recent bullish reversal may be coming undone. Ultimately, we would need to see a break below $1270 to add greater confidence that this is the case. Until then, a bullish push higher is still a strong possibility.

Brent turning higher after yet another 76.4% retracement

Brent is turning higher once more, following on from yesterday’s 76.4% retracement. This came off the back of a double bottom formation which had its low at the wider 76.4% retracement.

Therefore, we have the potential for both a wider and shorter term 76.4% retracement trade playing out for this market, should we continue to move higher from here. That is expected to be the case, with a break up above $62.80 likely in the near term. From a wider perspective, a bullish outlook remains valid unless we see a break back below $60.00. 

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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.