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Gold, Oil and EURUSD Weekly Analysis - Week 26

Gold prices attempt to breakout from range

XAUUSD 2206

The precious metal is finally looking to the upside on Friday as prices were attempting to breakout higher. However, given the set up, it is unlikely that the breakout will occur. This is of course, until we see a strong follow through next week above the 1730 level. Price action in gold has been stuck below this level. Repeated attempts to breakout above this level have also failed.

For the moment, watch how price action unfolds. The Stochastics oscillator remains close to the overbought levels. This could potentially indicate a move to the downside eventually. Given the fact that the price level near 1730 has proven hard to break, we expect a move lower.

This will keep gold prices back within the range. The lower target is seen at 1683.50 level. Support will most likely kick in and keep prices from falling further. However, given the fact that gold prices have been trading flat, there is a risk of the lower support giving up as well. This will open gold towards a possible correction.

Crude oil fails to breakout above 40.00

WTI 2206

Oil prices were slightly bullish on Friday. The US dollar was mixed but traders bid up the commodity higher. This potentially signals a move to the upside if there is a breakout above the 40.00 level. But given the set up at the moment, we suspect a pullback in the near term.

Oil prices managed to maintain a steady trend on Friday as prices hit 40.00 briefly before pulling back. This comes after prices briefly tested this level on 8th June. Following the gains, prices pulled back strongly only to recover from the local lows in the past few sessions.

If prices pullback lower, then we expect to see the 36.00 level coming up as support. As prices have managed to hold up at this level in the past, crude oil could settle into a range between the 40 and 36 levels in the short term. The bias remains to the upside however and we could see a breakout eventually.

Euro remains on the backfoot

EURUSD 2206

The euro currency continues to post a steady decline against the US dollar. the declines are now into the fourth consecutive trading session. The declines are widely expected as the US dollar has remained somewhat stronger in the past few sessions. The correction in the EURUSD is also widely expected.

Price action could take a break as it approaches the key price level near 1.1147. If this support level holds, then we expect to see a modest rebound. This could result in a lower high forming as a result. It would also confirm the downside bias.

For the moment, watch how price action reacts near the initial support area. If prices break down below this level, then we could see a move to the lower support level near 1.1000. A move to 1.1000 will potentially confirm the correction nearing its completion.

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