Gold, Oil and EURUSD Weekly Analysis - Week 09

Gold trades mixed as divergence builds up

Gold 2502

Gold prices attempted to rebound on Friday, partly recovering the losses from the day before. Price action looks firmly supported above the 1320 level support is being tested currently. However, with the divergence showing up on the daily and the weekly charts, the upside target to 1360 remains a bit difficult to achieve at the moment.

On the daily chart time frame, gold prices show a bearish divergence with the recent highs to 1346 coinciding with a lower high in the Stochastics oscillator. Similarly, on the weekly chart, there is a hidden bearish divergence which indicates a potential correction in price. If the support at 1320 gives way, then gold prices are likely to move lower.

The next main downside target is seen coming in at the round number support of 1300 followed by a decline to the 1250 level.

Crude oil stays bullish

WTI 2502

WTI Crude oil prices closed with a second week of gains. Price action looks positive and further bullish gains could be achieved. On the daily chart, oil prices have cleared the bearish Ichimoku cloud. This could mean that in the short term, oil prices could post a decline to retest the lower support.

Such a move could potentially signal that oil prices have bottomed after falling to lows of $42.50 in late December last year. The support is seen at the 54 handle which could see prices rebounding off this level. However, with the broadening wedge pattern being formed, there is scope for a deeper correction.

If the 54 handle gives way, then oil prices could extend declines to the 50 level where support is mostly likely to be strong and could attract fresh buyers into the market ahead of the bullish move.

Euro stays directionless


The euro currency continues to remain trading flat near the lows. The sideways consolidation which is now spanning into the third month could signal a lot of accumulation near the current levels. With prices unable to breakout from the range, the euro remains uninteresting at the moment.

However, the rather long period of consolidation could signal a potential breakout for a new trend to emerge. The downside support at 1.1335 - 1.1312 remains a key level of interest. If this support holds, we can anticipate the euro to continue trading flat but the bias will shift to the upside.

The main resistance level for the EURUSD is seen at 1.1450. This level needs to be breached in order for the currency pair to confirm the upside and potentially post further gains. The next main resistance is seen at 1.1700 level.

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