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Gold, Oil and EURUSD Weekly Analysis - Week 11

Gold starts its corrective phase

Gold 1103

After falling for nearly four consecutive trading sessions, gold prices reversed direction on Friday after a doji pattern emerged for nearly three consecutive trading sessions. The bullish close on Friday indicated the start of a correction to the upside.

Price action briefly tested the 1300 level before pulling back modestly. On the lower time frame charts, we see a strong hidden bearish divergence that indicates a pull back to this correction. We expect the pull back to remain above the 1280 handle. Forming a higher low above 1280 will potentially signal further gains to the upside.

If gold prices manage to break past the 1300 barrier, then we expect a test of the 1320 level in the near term. A test of 1320 will mark a retest of the breakout level. The overall bias in gold still remains to the downside however as the eventual test of support at 1240 remains on track.

Crude oil continues to trade flat

WTI 1103

Oil prices have maintained its range with price action being rejected on test of weekly lows. After oil prices rallied close to the 58 handle, they have remained flat indicating weakening momentum or consolidation. The ascending wedge pattern was formed but oil prices remained perched near the highs.

In the near term, we could expect to see prices eventually giving way for a test to the 54.00 handle which is pending a retest of support. Establishing support at this level will signal a potential move to the upside eventually with 58.00 likely to be breached.

Watch for a lower high being formed in order for the bias to shift to the downside. For the moment, the support at 54.00 remains vital. A break down below this level will trigger further declines in oil prices toward the 50.00 handle where support is required to be formed in order to confirm further upside in prices.

EURUSD retests 1.1200 as expected

EURUSD 1103

The euro currency fell strongly on Thursday last week after the ECB’s meeting. Price action slipped below the support level and tested the lows of 1.1200 level. However, the euro currency quickly managed to reverse the declines and closed on Friday with some bullish gains.

With a retest of the 1.1200 level, the overall bias in the EURUSD does not change. Price action still remains trading sideways and the range is established within 1.1450 and 1.1200. Unless we see a clean break off either of these levels, the common currency could remain trading sideways.

The bias to the downside remains limited for now, but the recently breached support at 1.1312 - 1.1282 will now act as resistance. The euro currency will need to breakout above this level in order to confirm the move toward 1.1450 level which could be tested in the near term.

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