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Gold, Oil and EURUSD Weekly Analysis - Week 21

Gold closes weaker as bearish trend likely to resume

Gold 2005

Gold prices extended declines for the most part of the week reversing the gains logged from the week before. The declines mark nearly four consecutive daily sessions where price declines. As a result, gold prices closed below the 1285 mark after initially rallying back to the 1300 level.

In the near term, watch for how gold prices will react as it test the dynamic support of the trend line. This will potentially indicate a move to the downside if price fails to reverse near the 1285 handle. Establishing resistance here will confirm the downside to the 1250 – 1240 region in the medium term.

The upside bias remains weak for the moment and therefore, we could expect to see some short term consolidation taking place between the recent lows of 1275 and the resistance level at 1285. The bearish divergence remains in play, contributing to the downside.

Oil prices recover back to 63 handle

WTI 2005

Crude oil prices posted strong gains for three consecutive daily sessions leading to price to retest the 63 handle. Friday’s bearish close potentially suggests that the retest of this resistance level is confirmed, and that price action could potentially break down lower in the near term.

On the smaller time frame charts, oil prices are posting a hidden bearish divergence near the current levels. This indicates a possible continuation to the downside. Watch for price to clear the initial low formed at 60.80 level. A breakdown below this level will suggest further declines to come.

The lower support at 57.50 will remain key at the short term. A retest of this level for support will confirm the anticipated correction in crude oil prices. The bias will be invalidated if oil prices breakout above the 63.00 handle on a daily basis.

Euro drops as the currency likely to retest the previous lows

EURUSD 2005

The EURUSD currency pair continues to trade mixed as price action has been weak for the past two daily sessions. Overall bias remains to the downside after the euro failed to capitalize on the gains after clearing the 1.1224 – 1.1200 level.

This level has now emerged as resistance and it could potentially see the euro currency extending declines lower. The previously formed low at 1.1134 will be critical in the near term. If this low is breached, then the EURUSD currency pair will likely drop further.

We expect to see some consolidation taking place in the near term, failing which the EURUSD currency pair could extend further declines and likely post fresh yearly lows.

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