Gold, Oil and EURUSD Weekly Analysis - Week 15

Gold rises for three consecutive days


The precious metal is up over 2.78% since the past three days, although price action remains confined to the bearish candlestick from Tuesday’s declines. Therefore, there is a chance that we could expect price to pullback within this range in the near term. The gains are primarily driven by the overall weakness in the global economy.

But given the current price action setup, there is scope for gold to breakout higher. For this to happen, we need to see a close above the 1620 level with a strong momentum. This will then put the next resistance level of 1680 into focus. Price touched this level last in early March this year.

To the downside, the support level of 1580 will be holding out. It is quite likely that price action will stall at this level in the event of a decline. But a close below 1580 could trigger further declines in the near term. Below 1580, the next lower support of 1523 will be the next target to the downside.

WTI Crude oil maintains gains on hopes of production cuts

WTI 0604

WTI crude oil prices rose for the third consecutive day on hopes of a possible supply cut to production. OPEC leaders are due to meet this week, tentatively and there is scope for a cut from as little as 6 million bpd up to 10 million bpd.

Technically, price rose to the 28.00 level. It is a bit too early to speculate on whether this level will hold out as resistance. However, a reversal off here could see some buying opportunity. But this is valid only as long as WTI crude oil remains within the 28 to 22 range.

Watch for a higher low to form in the short term, especially near the breakout of the minor trend line. Price needs to eventually breakout above 28 handle. This will put the upside target toward 42.00. Alternately, if prices fail to breakout above 28.00 then it puts at the risk the downside support of 22.00.

Euro slips to support which is holding for now


The euro currency has been sharply lower in the past few days. Price action fell all the way from 9th March highs of 1.1137 and closed on Friday at 1.0813. This sideways range continues to keep price action choppy in the medium term. But Friday’s slight rebound gives some hope.

If there is a follow through to the upside after the decline to the support level of 1.0813, then we expect the EURUSD to maintain a sideways range between 1.0784 – 1.1000 region. Unless price breaks out from this range, we do not expect to see further gains or declines.

It is quite likely therefore that the EURUSD will remain in a range for the near term. The downside looks a bit overdone for the moment. However, a close below 1.0784 could see the EURUSD testing the previous lows at 1.0700.

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