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Gold, Oil and EURUSD Weekly Analysis - Week 28

Gold prices consolidate into a rising wedge pattern


The precious metal did not make much gains last week after briefly rising to a fresh nine-year high. On the contrary, prices closed flat into Friday. The price action reflects the current market uncertainty on doubts of economies reopening fully. As a result, the market risk sentiment is broadly mixed.

The rising wedge pattern on the daily chart suggests a possible breakout. Assuming that gold prices break down lower, we expect the downside target toward the 1730 region. Establishing support at this previous resistance level might renew the bullish momentum in the commodity.

Alternately, there is scope for gold to continue to push high. A close above the previous highs will confirm this view. It comes as the 1800 elusive price target in gold is within reach. Therefore, watch how prices unfold in the coming week. The major trend line could also act as a dynamic support level for gold.

WTI crude oil turns flat below resistance

WTI 0607

Oil prices are trading flat with prices consolidating near the 40.00 handle for the past few sessions. The upside technical resistance near 42.00 remains unreachable yet. However, we could see a possible breakout higher in the near term.

The volatility in the crude oil market has also decreased. This comes on doubts on supply as the pandemic outbreak continues. Major parts of the US are still under a lockdown. Meanwhile, OPEC members continue to discuss the possibility of further supply cuts while also looking at ways to enforcing the supply caps from the respective members.

If crude oil prices fail to breakout above 42.00 then we expect to see a move back to the 36.00 level. A minor support at this level could hold prices in the short term from further declines. But if oil prices lose the 36.00 handle, then we expect a correction toward the 28.00 level in the medium term.

Can the EURUSD breakout from its range trading?


The euro currency is into its sixth consecutive session of sideways trading. Although price action briefly rose to highs near 1.1300, the daily close suggests that the euro currency is losing its momentum. The consequent lower highs cast a shadow to the downside.

The euro currency could however see a potential breakout happening. To the upside, price needs to close above 1.1300 handle to confirm further highs. While to the downside, the lower support near 1.1200 needs to be breached for a correction toward the 1.1100 level.

With the US dollar trading mixed, we expect to see this consolidation continue in the EURUSD currency pair. The Stochastics oscillator is also not giving much hints as the indicator is firmly above the 20 level.

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