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Gold, Oil and EURUSD Weekly Analysis - Week 16

Gold turns bearish towards the end of the week

Gold 1504

Gold prices continue to baffle investors as the bullish momentum that started a strong rally in the price faded by the week’s end. The precious metal was seen giving up most of the gains as price turned bearish since Thursday last week.

Despite the bearish close, gold price still remains above the support level of 1285. As a result, the bullish bias cannot be ruled out just as yet. Gold will need to break past the 1285 level of support in order to confirm the downside bias towards 1250 level initially.

Watch for how price action will evolve over the week ahead as this could mark the start of the bearish continuation to the downside. With the Stochastics on the daily time frame giving a sell signal, we expect the momentum to pick up pace for a correction lower.

WTI Crude oil pauses the rally

WTI 1504

Oil prices were seen trading somewhat weaker last week as price action turned flat showing signs of exhaustion to the rally. The gains in oil prices have been extended since early this year with the rally showing little signs of a pullback.

As price trades flat just below the resistance area of 65.00 we expect to see a modest pullback in price as a result. The bullish trend still remains intact as long as the correction is limited. A close below 64.42 is required to confirm a move to 63.11 where the support is expected to hold.

But watch for a deeper correction as this could potentially shift the current long term bullish bias for a test to the 65 – 66 level of resistance. We maintain the view that oil prices will eventually test the 65 – 66 level before preparing for a stronger correction to the 60 handle.

EURUSD likely to turn bullish

EURUSD 1504

The common currency has been trading flat for the past few months. However, if the weekly price action is anything to go by, we expect this could soon end. The EURUSD has closed with a strong bullish candlestick on the weekly chart following the doji from the week before.

This could potentially prepare the way for a long term pending move to the upside. On the daily time frame, the EURUSD has been somewhat volatile, but prices closed bullish on Friday. This is likely to see the EURUSD pushing higher to test the initial resistance level at 1.1395.

A breakout above this level is required to confirm the upside bias. A close above 1.1400 handle could signal a strong move towards the 1.1600 level in the near term. However, considering the volatility in the currency pair, we expect price to remain somewhat choppy.

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