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Technical analysis: key levels for gold and crude

Gold and Brent are both attempting to stabilise following Friday’s sharp selling. Both have the potential for short-term upside, yet the selling could also come back into play before long.

IG Analyst

Publication date : 2018-06-18T09:38:56+0100

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Gold tumbles through trendline support

Gold ended the week with a sharp drop through a number of key support levels, breaking trendline support in the process. The wider context of higher lows throughout the past two years means that there is a good chance we will turn higher once again before long.

A break below $1236 would negate this view. Until then, we may see strength come back into play before long. With the 76.4% retracement at $1267, the short-term picture points towards the potential for further downside. However, even if we did see another leg lower in the short term, the sharp nature of this recent decline means there is also a risk of a near-term retracement or period of consolidation. As such, it may make sense to look for longs around $1267, and until then there is a good chance of either a short-term bounce, or simply another move lower.

Gold chart

Gold chart

Gold chart

Brent rebounding from key support level

Brent tumbled lower as we ended the week just gone, with Friday’s Organisation of the Petroleum Exporting Countries (OPEC) meeting on the minds of many. The ability to break below the $72.35 level will tell us a lot about where we go from here.

However, in some ways the fact that we have even hit that levels says a lot about the potentially bearish shift coming our way after months of upside. Nevertheless, with the $72.35 support level being well respected, we can expect some form of bounce from here, if only to retrace some of the sell-off from $77.49. With that in mind, further short-term upside seems likely, where a deep retracement could bring about an interesting shorting opportunity as we move closer to the important OPEC meeting.

Brent chart

Brent chart

Brent chart

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