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Gold, Oil and EURUSD Weekly Analysis - Week 20

Gold resettles near 1285 resistance

Gold 1305

The price action in gold last week was volatile. By Friday’s close, prices settled back near the key resistance area of 1285. The rebound back to this level came as gold briefly dipped lower, only to be support by the multi-month trend line.

Gold remains within the downtrend, as seen by the downward price channel. The retracement to 1285 will be key from here on. Currently, the daily chart signals a hidden bearish divergence on the Stochastics. Thus, a reversal off the 1285 level would be critical for further downside.

In the event that gold continues to trade higher, then a close above 1285 and a possible retest of this level for support will invalidate the downside bias. If price reverses course, we expect gold to eventually rally to test the 1300 level in the near term.

Crude oil expected to trade flat

WTI 1305

The recent declines in the oil markets is showing signs of the downside momentum stalling. After prices initially dipped to lows of 60.06, prices bounced back modestly. Price action has been confined to the range since then.

The current range trading over the past four daily trading sessions could potentially indicate a breakout in the near term. The bias remains to the upside for the moment. Oil prices are likely to retest the resistance level of 63.00. A firm retest of this level will be crucial to the next leg in price action.

If oil prices tend to reverse around the resistance level of 63.00, then we expect to see the downside correction prevail. Price action will need to breakout from the range in order to establish the downside correction. We maintain the view that oil prices will be testing the lower support of 57.50 in the medium term outlook.

EURUSD range trading is maintained

EURUSD 1305

The common currency continues to remain trading choppy near the current lows of 1.1200. Price action remains volatile and as seen on the daily chart, price action has been trading rather flat. This consolidation is likely to continue in the near term.

However, the more the EURUSD trades above the 1.1200 level of support, it is more likely that the upside bias will be established. Overall, the Euro is seen trading within the descending wedge pattern that has been forming on the weekly chart.

A successful breakout from this consolidation pattern to the upside could potentially send the euro currency higher in the longer term. The main resistance level is seen at the 1.1395 – 1.1400 level.

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