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Gold, Oil and EURUSD Weekly Analysis - Week 17

Is gold set for a rebound?

Gold 2204

Gold prices settled last week at fresh 2019 lows of 1275.49. This came after price briefly dipped to 1271 before pulling back. The gold markets were closed on Friday and it is likely that we could expect to see a gap over the opening session. The current set up in gold shows that there could be a rebound in price in the near term.

This view holds as the daily Stochastics indicator is signaling a potential rebound from the oversold levels. With gold clearing the support region of 1285 – 1290, this makes for a likely level for retracement. If resistance is formed here, we could expect to see the declines resuming later during the week.

In the unlikely event that gold prices manage to close above the 1285 – 1290 region, then the bearish outlook comes under question. But this scenario is not that likely at this point. For the week ahead, watch for signs of reversal in gold prices near the 1285 – 1290 level.

Crude oil stays flat near the top

WTI 2204

Oil prices have turned flat for the past nine daily sessions. Price action stalled short of the 65 – 66 level where resistance is most likely to form. While prices have remained somewhat mixed, we expect to see oil prices resuming the upward trend.

A test of the 65 – 66 level could potentially mark a retest of the level which previously served as support. The Stochastics oscillator is also showing a strong hidden bearish divergence to past price action. This potentially indicates that crude oil prices to snap after testing the resistance area.

To the downside, the correction is likely to take place around the 57.50 level which previously served as resistance. Therefore, this level is pending a retest of support and makes for the ideal downside correction. The correction to this level will mark a potential rebound in oil prices which could eventually see the 65 – 66 level being breached.

EURUSD maintains the sideways range

EURUSD 2204

The euro currency has been undergoing a lot of consolidation near the 1.12250 level. Price action initially swung higher but the common currency gave up the gains significantly to fall back to the support area.

The EURUSD continues to trade within the 1.1400 and 1.1200 levels, a range that has been maintained over the past few months. With no clear trend in sight, the prospects for a breakout remain balanced. The euro could potentially breakout higher but there is also a chance for a downside breakout.

For the moment, it is best to remain on the sidelines and wait for the currency pair to sort out the direction before we take any view on the trend.

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