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Technical analysis: key levels for gold and crude

Gold looks to be coming back into favour, but will we see Fibonacci resistance send it lower once more? Meanwhile, a Brent triangle means we await a breakout for direction.

IG Analyst

Publication date : 2017-02-16T09:58:42+0000

Mining

Source: Bloomberg

Gold breaking higher from trendline support

Gold has proved a tricky customer over the past 24 hours, with an initial break through triangle support failing to last, sending price higher. The subsequent break through the trendline and $1234 resistance has provided a more bullish picture. However, it is the respect of the triangle top as new-found support, which makes things look more bullish. The price has since rallied to the 76.4% retracement at $1238, which will be key to determining whether we are set for a bearish turn lower or not.

A strong rally through $1238 would provide a lower chance of this recent downturn persisting. However, with gold having broken out of an upward channel, there is a chance we could see a deep retracement within a bearish reversal. Ultimately, a reversal lower from here would point towards a good chance of the market being within a near-term top, while a break through $1245 would signal a resumption of the uptrend.

Gold chart

Gold chart

Gold chart

Brent trading within triangle formation

Brent is trading within a symmetrical triangle formation, set within a wider range. Given that we are seeing this pattern within the middle of a range, it makes sense to take our lead from the breakout.

An hourly close above $56.42 (bullish) or below $55.75 (bearish) would be the key signal for our near-term bias. That being said, remember that the wider range will dictate the state of play, and thus any break higher or lower could be short-lived.

Oil chart

Oil chart

Oil chart

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