Technical analysis: key levels for gold and crude

Gold rally under question

Gold saw a strong move lower over the last two days of last week, bringing into question the strength we have seen of late. The crucial thing to note here is that last week’s highs are around the top of a multi-year wedge pattern and thus unless a bullish breakout is going to occur it seems likely that the sellers will return once more.

For this bearish view to come into play, we would need to see a close back below 1115 $ support. Below that, $1113, $1110 and $1108 would be key.

The $1108 level in particular would be crucial, as a close below there would create a double-top formation. However, until we see some sort of bearish shift, this gradual move higher can persist, with $1128 the key resistance level in view. 

US crude within wide consolidation

US crude has been trading within a wide consolidation range over the past two trading days. This would point towards further gains given the trend coming into this current move.

Given the doji candle from just above the key $33.18 support level, it seems likely we will see some upside, if only to resume this range. However, a closed hourly candle below $33.18 would be a warning sign, given that it represents the completion of a double-top formation.

Should that occur, this would bring support levels of $32.70 and $32.12 into view. 

01/02/2016
Joshua Mahony, Market Analyst, IG London