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Gold, Oil and EURUSD Weekly Analysis - Week 01

Gold rally ripe for a correction

Gold 311218

Gold prices have surged during the holiday thin trading. Price action maintained the bullish momentum as it closed out near the 1280 level. The past few sessions have indicated that gold prices are now consolidating around the 1280 - 1280.50 level. This comes amid the Stochastics oscillator pointing a lower high suggesting bearish divergence and thus a possible correction.

The lower support at 1250 handle is a prime target for the downside correction in price. This comes as the level previously served as resistance. The breakout from this level pushed gold prices strongly higher. Therefore, for the precious metal to maintain further gains, support needs to be established. This comes from the retest of the 1250 level.

For the moment, the bias is to the upside with the Ichimoku cloud seen to be firmly bullish. A break down below 1274 - 1275 level could potentially mark the start of the correction to 1250.00

Crude oil posting a rebound but bias remains weak

WTI 311218

WTI Crude oil prices were seen bouncing off the lower support at $42.50 as noted in the previous week's commentary. The rebound came as crude oil prices touched down to the identified target price level. Price action was seen to be bullish as it completely recovered from the losses from the previous sessions.

Despite this rebound, the overall bias in crude oil remains to the downside. Failure to breakout below $42.50 could push oil prices to potentially retest the $50.00 handle. Establishing resistance at this level could make oil prices stay within the range of the support and resistance levels.

Watch for a higher low being formed on the smaller time frame charts in order to target oil for $50.00. Alternately, failure to post a higher low and a decline to the $50 handle could potentially keep oil prices subdued with a possible breakdown below the $42.50 handle.

EURUSD - Testing the strong resistance level

EURUSD 311218

The EURUSD currency pair has managed to gradually lift higher as price action is seen testing the strong resistance area. This level coincides with the falling trend line as well as the horizontal resistance level of $1.1450.

The consolidation below the $1.1450 level has resulted in oil prices forming a bullish ascending triangle pattern. A strong breakout above 1.1450 is required for the EURUSD to potentially post higher gains. The minimum upside objective for the EURUSD is toward 1.1600 level. Further gains cannot be ruled out unless the common currency posts a retest of the 1.1450 level for support to be established.

To the downside, failure to breakout from the 1.14500 resistance level could keep price action subdued. Watch for a breakdown below the minor rising trend line. This could push the common currency to retest the previously established lows at 1.1200.

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