Gold, Oil and EURUSD Weekly Analysis - Week 14

Gold recovers after two weeks of sell off


The precious metal recovered from the previous two weeks of declines, closing on a bullish note. Price action has recovered more than half of the losses from the past two weeks, gaining over 8% on the week, into last Friday’s close. With price closing at 1617.50, the precious metal is a few points away from the seven year highs of 1701.

For the moment, price action is consolidating a bit near the 1620 level. A breakout above this level is needed to confirm further upside toward the 1640 handle. To the downside, the 1580 level of support comes into play. If support holds here, we expect the upside momentum to build up.

However, a decline below 1580 could trigger further declines back to the 1522 handle. Given the price action and the Stochastics, we expect the volatility to moderate in the near term.

Is there a divergence building up in crude oil?

WTI 3003

Crude oil prices continue to remain weak, with price action staying firmly close to the 22.00 handle. Overall, oil prices have been down for five consecutive weeks so far, although the pace of declines over the previous week is smaller comparing to the weeks before.

Crude oil prices are down a whopping 65% from the 30th December 2019 highs. This marks a sharp decline in oil in just a mere five week period. The Stochastics oscillator is entrenched into the oversold level, but the indicator shows that momentum is weakening.

We could therefore anticipate a possible bottom formation in place. Price action needs to rise above 25.00 handle to confirm the upside. This will put the immediate resistance level of 28.00 within reach. Further gains can come only on a successful breakout above the 28.00 level.

Euro rebounds, erasing more than half the losses


The euro currency is bullish, recovering from the slump just a week before. Price action is up over 4.3% on the week, paring losses from the previous week. This rebound potentially indicates that a bottom might be in place for the euro after the currency closed above the 1.1000 handle.

For the moment, we expect the retracement to briefly dip back to the 1.1000 level. If support successfully forms here, then we anticipate further gains to the upside. The next big target for the euro will be seen at the 1.1400 level.

Alternately, if prices slip below the 1.1000 level then we expect the sideways range to form within the 1.1000 resistance and 1.0784 level of support. With the trend line still in play, this could also act as a dynamic support to keep a lid on the declines for the short term.

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