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Gold, Oil and EURUSD Weekly Analysis - Week 30

Gold tests 1450 and retreats

Gold 2207

Gold prices gave one final push as price action rallied on Friday to post a fresh six-year high. The gains in the precious metal came following the breakout of the resistance area near 1420. This led to price consolidation resulting into an ascending triangle pattern.

With the target reached and price retreating by Friday’s close, gold is back near this breached resistance area. If the 1425 – 1420 region acts as support, we could expect to see some more highs being formed.

But unless there are high highs, we expect gold to trade flat and consolidating again or we could expect to see an eventual decline in gold. Since the correction in gold prices is long pending, we expect that the bias is relatively flat at the moment.

Oil prices close flat after a strong week of declines

WTI 2207

On Friday, the declines in oil prices were seen coming to an end as price action closed flat. Investors look for further fundamentals ahead of deciding the direction in oil prices. Crude oil prices are down by over 7% on the week following the failed test near the 60.64 resistance.

Friday’s doji indicates that there could be a reversal in the short term trend. Alternately, we could expect to see price continuing the declines lower. The lower support at 54.00 still remains within sight.

The weekend developments that Iran seized a British oil tanker will no doubt raise tensions. This could lead to oil prices potentially gaining on the back of the developing news. As a result, we expect oil prices to trade flat within 57.50 and 54.00 levels.

Euro slips back to support

EURUSD 2207

The EURUSD currency pair was seen erasing the gains made from Thursday. By Friday’s close, the currency pair settled back in the support area of 1.1224 – 1.1200 region. This marks another week of flat trading with the EURUSD.

The decline back to the support level will be one to watch closely. We expect the currency pair to continue this trend. The ECB is due to hold its monetary policy meeting on Wednesday. This could be a major market moving event that will potentially give the EURUSD a short term direction.

In the near term, if the support level breaks, then the currency pair is likely to decline to fresh lows. Price action shows the head and shoulders pattern still at play. Therefore, watch of the EURUSD reacts to the neckline support area.

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