Technical analysis: key levels for gold and crude
The recent decline in gold has paused momentarily, and with Fibonacci support in play, the move from this consolidation is going to be key. Meanwhile, Brent weakness looks like a precursor to another leg higher.
Gold pauses after steep declines
Gold has sold off heavily since reaching the 76.4% Fibonacci retracement a week ago, yet we are finally seeing some consolidation taking shape. There is a good chance that this could just be a brief breather before we see another leg lower.
However, with the price consolidating around another 76.4% level, we could also see some form of rebound from here. Ultimately it makes sense to see how we emerge from this consolidation, where a break below $1274 would bring about expectations of a move back towards $1266. Otherwise, a rally through $1279 would signal some form of rebound taking shape.
Brent drifts lower, yet bullish trend may not be over yet
Brent is drifting lower after a bullish gap higher at the start of the week. The recent respect of an inside trendline points towards a potential area of support should we see further downside.
However, ultimately this current move lower looks like a precursor to another surge higher. As such, while we could see short-term downside, the likeliness is that the price of Brent will create another leg higher before long. Only with a break below $69.33 would this bullish outlook be negated.
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