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Gold, Oil and EURUSD Weekly Analysis - Week 25

XAUUSD back to the top end of its range


Gold prices failed to capitalize on the gains made earlier during last week. This had sent price action back to the upper range at 1730 levels. Despite a brief breakout above this level, gold prices closed back inside and below this range. The market price action reflects the investor sentiment which remains mixed at the moment.

Given that gold prices failed to make any further gains, we expect prices to move back to the lower end of the range. The downside target as a result is the 1683.40 level. The precious metal has been trading flat within these levels since April.

Therefore, there is also the possibility that gold price could be nearing a breakout anytime soon. The bias remains mixed for the moment as we could see price breaking out in any direction. The long term target in gold is to the upside as price action is due to hit 1800. But for the moment, we expect the consolidation to continue.

Oil prices attempt to recover after declines

WTI 1506

Crude oil prices are firmly trading near a three-month high. After Thursday’s declines, price action on Friday saw some modest movements and oil prices in fact closed in the green. The fundamentals however remain bearish for the crude oil market at this point. US crude oil inventories continue to operate near full capacity as OPEC members struggle to bring supply under control.

For now, the oil market is due for a correction, unless prices break the trend and moves higher to test the 42.00 level. We expect resistance to form near this level. It will potentially send oil prices lower at least at the first instance.

To the downside, correction in crude oil prices might send the commodity back to the 28.00 handle. This level is expecting a retest of support and could see it being tested at some point. But in order for oil to test this level, it needs to clear the current minor support at 35.00. Only a strong close below this level can confirm this view.

EURUSD eases after hitting a three-month high


The euro currency is seen retreating into Friday’s close just after prices briefly tested the key 1.1400 level. Price action is bearish for two consecutive days so far. This comes amid a renewed strength in the US dollar. The dollar has been rising on the back of concerns of another wave of the coronavirus and bleak economic prospects.

Watch how the EURUSD will react to the 1.1300 handle which it lost last week. If this level turns out to be resistance, then it will open the way for further declines. The next key level of support is at 1.11475. Following this, the EURUSD could drop as far as 1.1000 level.

To the upside, if price breaks out above 1.1300 then the upside is likely to continue. This time around, the EURUSD might be able to break past the 1.1400 level and rise to new highs for this year.

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