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Gold, Oil and EURUSD Weekly Analysis - Week 3

Gold trims losses as bullish momentum returns

XAUUSD 1301

The precious metal reversed losses from the two previous days to close on a bullish note on Friday. However, price remains far off from the initial highs set earlier in the week. The reversal came largely due to a mixed jobs report which is seen to be somewhat weaker than expected.

The reversal in gold price comes as price briefly tested the outer median line. With dynamic support established here, price could threaten the previous highs. A breakout above these highs is needed to confirm further gains.

If gold fails to move higher, we expect either a consolidation to take place or perhaps even a correction to the downside. The lower support at 1522.80 will be the key level to watch out for. A breakdown below this level will accelerate declines to the 1498 level of support.

Crude oil continues its declines

WTI 1301

Crude oil prices were extending the declines lower, falling for the fifth consecutive day. This comes as resistance has been most likely established near the 66 – 65 region. Oil prices gained initially on the tensions between Washington and Tehran.

However, as things cooled, the markets were quick to push the USD higher. The fundamentals in the oil markets remain mixed. If the current declines continue, then prices could be testing the rising minor trend line.

There is scope that oil prices will bounce off this level in the near term. This will see the price level of 60.64 being tested for resistance. If the resistance holds then price action could continue declining further. A breakdown below the trend line could push oil back to the 56.00 level of support.

Euro remains muted amid flat trading

EURUSD 1301

The euro currency closed on Friday with a doji pattern but below the minor trend line. Given that this is a confluence of the horizontal support level, price could be biased for further declines in the near term. The USD strength is playing a major role in the EURUSD’s current consolidation.

The common currency could be on track for a decline to the major trend line. A break down below this trend line will trigger a move to the 1.0958 level. To the upside, the current price level near 1.1111 will act as resistance.

Unless price breaks above this level we expect the EURUSD to trade sideways. In the longer term horizon, the EURUSD is looking into a massive consolidation. This could eventually trigger in price action breaking out to the upside.

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