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Technical analysis: key levels for gold and crude

Both gold and crude are at crucial crossroads, with potential reversals in play. Which way will they go?

anonymous

Publication date : 2017-01-13T10:19:20+0000

Oil rig at sea

Source: Bloomberg

Gold drops back below $1200, but for how long?

Gold has dropped back below the crucial $1200 mark overnight, following on from a near 7% rally over the past month. Given the importance of that level, there is a chance we could see some selling come into play, with yesterday’s daily candle closing out as a shooting star.

For this bearish sentiment to have any wider relevance, we would need to see $1177 taken out, which remains some way from current price. As such, an hourly close above $1207 would be required for the bullish sentiment to persist. Until then, it may be prudent to be thankful for the gains we have seen already over the week and wait for confirmation that $1200 has truly been overcome.

Gold price chart

Gold price chart

Gold price chart

Brent pauses following recent gains

Brent crude has rallied higher in the wake of Donald Trump’s press conference, following a move back into the long-term inverse head and shoulders neckline (weekly timeframe). Price has managed to hold up above that $53.00 level, providing a clue that we could be in for some sort of resurgence.

However, for that to be confirmed, we would need to see $57.61 taken out. For now, price is moving into the 76.4% region, which considering the downtrend in play in 2017 so far, could provide an interesting short opportunity. Given the long-term importance of this $53.00-54.30 support zone, it makes sense to await a break through $57.61 to below $53.00.

Brent crude price chart

Brent crude price chart

Brent crude price chart

WTI weakening from Fibonacci resistance

WTI is similarly consolidating following a move into the 76.4% retracement. Again, the message is the same in that we have a major support level at $51.24 to the downside which needs to be taken out for a bearish view to come into play.

As such, either a break above $53.81 or below $51.24 would be required to provide the next outlook for WTI.

WTI crude price chart

WTI crude price chart

WTI crude price chart

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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.

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