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Gold, Oil and EURUSD Weekly Analysis - Week 07

Gold prices rebound but highs in place

GOLD 110219

Gold prices were seen attempting to recover from the previous week's losses as price action on Thursday and Friday saw a brief reversal in price action. The rebound coincided with the retest of the outer median line pushing gold prices briefly higher on the day.

However, the failure to post new highs could potentially signal that a top has been formed. The resistance level at 1320 remains key however in this aspect. As long as price does not break out above this resistance level we expect gold prices to remain subdued.

With the local low formed at 1306 level, watch for a breakdown below this level which will extend the declines slightly to the 1300 level. Given the proximity to the support level, we expect gold prices to most likely breakdown strongly. The lower support at 1280 will be the support level to keep an eye on.

Price action could potentially bounce off this support and move sideways within the 1300 and 1280 levels. Only a break down below 1280 will trigger further declines to the 1250 level of support that we expect.

WTI crude oil breaks down from the rising wedge pattern

WTI 110219

Crude oil prices broke to the downside following the consolidation which led to the formation of the rising wedge pattern near the resistance level. The resistance level at 54.00 was briefly tested but oil prices failed to break higher and capitalize on the gains.

The declines to the downside from the rising wedge pattern could signal a move to the downside with the support at 50 handle likely to hold the declines in the near term. This would potentially mark a correction to the downside.

On an intraday basis watch for any modest retracement in price action from the current levels which would make for good selling opportunities.

The test of the 50 round number support will signal a possible move lower to the main untested support at 46.80. This view is also validated by price action being moving into the bearish Ichimoku cloud which provices further validation to the resistance.

Euro forming a head and shoulders pattern

EURUSD 110219

The reversal in the EURUSD currency pair above the 1.1450 resistance level has pushed the common currency lower. By Friday's close, the euro currency was seen trading close to the support level of 1.1312 - 1.1282.

As a result, the price action since mid-December last year has formed a head and shoulders pattern near the consolidation area. If the neckline support level at 1.1312 - 1.1282 fails to hold the declines, then the EURUSD could potentially extend declines further toward 1.1000 at the very least.

However, in the medium term outlook, the EURUSD continues to trade within the triangle pattern. Therefore, there is scope for the euro to rebound off the support which also see's confluence with the trend line.

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