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Gold, Oil and EURUSD Weekly Analysis - Week 02

Gold prices give back gains

XAUUSD 1101

the precious metal has posted declines for three consecutive days so far. The pace of declines has been quite strong and as a result, gold prices were down by nearly $100. It was only three days ago that the precious metal was seen testing the 1950 level. However, by Friday's close, the precious metal was seen settling below the 1850 level.

For the moment, the price action in gold prices continue to remain within our view of the Cup and handle pattern. However, for this to materialize, we will need to see a rebound in the short term. This means that over the coming week, gold prices will need to pull back from the 1850 level of support and post a lower high.

We expect the rebound to retest the 1900 level once again. In the medium term, gold prices will most likely have to post a consolidation between the 1900 to 1850 level. There is also scope for prices to touch down to the 1800 level. the stochastics oscillator has moved out from the overbought levels. Therefore, keep an eye out on gold prices which could potentially post a strong reversal in the short term.

WTI crude oil rises for nine weekly sessions

WTI 1101

WTI crude oil prices continued to post strong gains with the overall price action showing an increase for nine consecutive weekly sessions. Looking to the daily charts, the gains come following a brief consolidation near the top end of the rally. As we pointed out few days ago, the ascending triangle pattern was found to be strongly bullish for the oil markets.

The gains in the oil prices come as various countries across the world begin rolling out their COVID-19 vaccination plans. This is expected to see the global economy slowly but steadily returning back to normalcy. As a result, oil prices a rising higher in anticipation of the economies coming back to normal. In the short term, we expect the current pace of gains to near its and.

For the moment, there is a strong resistance level that is likely to form near the 53 level. However, in the unlikely event that oil prices continue to breakout higher, then we could see the next key level near 55 being tested. This would potentially mean that a strong correction is likely to happen. The support level near 51.45 will be key during this correction to the downside.

EURUSD breaks down lower from the ascending triangle

EURUSD 1101

The euro currency is posting declines for the second consecutive daily session. The declines come as the US dollar has been posting a strong rebound and maintaining gains for the third consecutive session. This comes, after the US dollar hit a two and half year low just a few days ago. For the EURUSD, the current break out to the downside remains consistent with our view.

The common currency has been posting a strong rally over the past several months. However, and recently express action has slowed down in its pace of gains. As a result, the common currency has been posting higher highs albeit at a smaller momentum. This is indicative of possible exhaustion to the upside momentum.

The euro currency is however still not out of the woods. A strong follow through is required in order to confirm the downside. A close below 1.2200 will potentially confirm this view. Following this, or lower high around this level will also confirm that the downside by us is now setting in. The next key support level will be seen near the 1.1900 level . However, the 50 day moving average is likely to act a dynamic support. This 50 day moving average currently sits near 1.2085 level.

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