Gold, Oil and EURUSD Weekly Analysis - Week 05
Gold prices test 1300 level eventually
Gold prices bounced back higher by Friday's close after price action was seen holding off the support near 1280. The strong gains on the day pushed the price of precious metal higher to close above the 1300 level.
We were anticipating this test of the 1300 level. With gold prices closing higher, we now expect to see price action consolidating near this level in the short term. As long as further gains do not come above the 1300 level, gold prices are likely to consolidate near the highs for the short term. The bias remains to the downside.
Gold prices will test the 1280 level eventually which could establish the range between 1300 and 1280 in the coming weeks. Given the fact that gold prices failed to test the lower support at 1250 - 1240 we expect that gold prices will eventually push lower.
Oil prices likely to stall at 54
Crude oil prices were seen testing the 54 handle where resistance has now been established. Price action is now expected to retest this level in the near term but it is unlikely that we could see further gains to the upside.
Oil prices are likely to maintain the range between 54 and 50 level in the near term. A breakout from this level will eventually dictate the new direction in downtrend. We expect price to test the lower support at 46 level in order to post a bottom in prices.
Alternately, if oil prices breakout higher, we could expect further gains to push oil prices to the 58.00 level. The Stochastics oscillator is seen posting a hidden bearish divergence. This is expected to validate the downside bias in price action for crude oil.
EURUSD consolidation continues
The recent price action in the EURUSD currency pair has kept the currency pair to move in a consolidatory phase. The longer term triangle pattern is expected to see the common currency continue to maintain the sideways range. However, the bias remains strong for the euro to push higher.
The resistance level at 1.1450 will be tested in the near term. However, at the same time, the support being formed at 1.1312 - 1.1282 level is signaling a potentially bearish head and shoulders pattern.
The right shoulder is likely to form at the resistance level of 1.1450. If we see a reversal at 1.1450 then the head and shoulders pattern could potentially be formed.
A subsequent decline below the neckline support could trigger the downside bias. This would puth the euro to test the lows near 1.105 levels.