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Gold, Oil and EURUSD Weekly Analysis - Week 02

Gold prices settle lower, but 1300 in sight

Gold 070119

Gold prices closed a week of strong gains settling back close to the 1280 handle. A level that we have been closely watching. The declines to the 1280 handle the subsequent rebound came as gold prices failed to test the elusive 1300 round number resistance level. On the daily chart, gold has managed to close with an outside bar on a bearish note suggesting temporary weakness.

While the price action dictates that gold could be getting ready to post a correction, we wait for price action to evolve around the upper range of 1280 and 1300. If the current rebound persists, gold prices could be seen consolidating around the current range. We do not rule out a test of the 1300 level in the near term. Failure to post fresh highs could increase the risks of a downside move in the precious metal.

The Ichimoku cloud remains firmly in an uptrend and this could mean that price action could be seen attempting to push higher. However, in the event that gold prices test the 1300 level, we can expect to see the initial price action to push lower.

Watch for the downside target of 1250 - 1240 region if the support at 1280 gives way.

WTI crude oil maintains its consolidation

WTI 070119

Crude oil prices edged higher on Friday as price briefly rose to 49.09 before easing back. The consolidation near the lows of 42.50 is leading up to a rising wedge pattern. The short term support is identified at 46.00. A retest of this support in the short term could potentially keep crude oil to break higher.

However, at the same time the bearish pattern could indicate that oil prices could resume the bearish trend. This is subject to price breaking the previously established floor at 42.50. A break down from this level could indicate further declines which the downside target coming in at 32.

However, this scenario is unlikely to play out at the moment with OPEC countries favoring higher oil prices. The decline to 32 could potentially mark a crisis among the OPEC nations and could lead to some strong action such as curbing production in order to stabilize prices further.

As a result, while the downside looks a bit doubtful at the moment, oil prices could be seen maintaining the sideways range within the 50 - 42.50 corridor. We can expect strong resistance coming in at 50 level which previously served as support but so far has not be tested for resistance.

EURUSD still remains aimless

EURUSD 070119

The euro currency started off the first week of trading with its sideways range. No clear pattern has emerged so far. However, the flat range indicates that the EURUSD is clearly forming a bottom. The lower support at 1.1200 remains a key level of interest. Question is whether this support will still be tested.

The longer term ascending triangle pattern remains in place as long as the rising trend line is not breached. Resistance can be cleared seen at the 1.1450 level which has failed to see any strong breakout so far. Rather the downside momentum has remained strong.

The Ichimoku cloud reflects this sideways range in the euro currency with thecloud staying rather flat and not providing any meaningful information. There is a strong possibility that the euro currency could potentially breakout from the resistance. This would validate the ascending triangle pattern and gives a minimum upside target of 1.1700 over the coming months. As a result, we are biased to see the EURUSD to the upside, save for some short term downside movements.

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