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Gold, Oil and EURUSD Weekly Analysis - Week 18

Gold closes the week with gains

Gold 2904

Gold prices surged on Friday as price action saw a bullish close. Gold was up almost 0.7% on Friday as it erased the declines from the week before. As widely expected, the precious metal closed the week near the 1285 handle.

Questions remain whether the close near the 1285 handle will mark a test of resistance and if gold will reverse direction from here on. Failure to reverse the gains could see gold regaining the bullish momentum and could potentially upset the bearish trend that is in play.

Therefore, the week ahead will be crucial as investors watch how gold prices will react to some big events such as the FOMC meeting and the payrolls report. A reversal between 1285 – 1290 should suffice as this could push gold prices lower and keep it on track to test the 1240 – 1250 support.

Oil prices should rebound

WTI 2904

Crude oil prices were down 3.47% by Friday’s close. The declines came as price initially rallied to fresh yearly highs near the 66.06 – 65.00 region. Failure to post further gains has kept oil prices to break down on Friday.

However, price action is likely to find support near the lower trend line of the rising price channel. This could offer a short term rebound in oil prices. Watch for a lower high to be formed on this rebound, following which oil could be set for further declines.

The support level to the downside is seen coming in at 57.50. Establishing support at this level could be ideal as it would mark a healthy correction in oil prices. The overall trend remains to the upside and it would be ideal to go long near the 57.50 region.

Euro to resume the down trend?

EURUSD 2904

Last week, the euro currency posted strong declines as price tested new yearly lows after breaking below the 1.1200 region. The euro currency remains quite choppy as Friday’s price action shows a potential rebound on the horizon.

We expect the euro currency to test the breached support level of 1.1200 following which the common currency should resume the downtrend. A break down below the currently established lows of 1.1174 is needed for the common currency to test new lows.

However, we expect the downtrend to be somewhat maintained as the euro is close to forming a bottom within the larger trend.

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