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Gold, Oil and EURUSD Weekly Analysis - Week 31

Gold stays in a holding pattern ahead of Fed meeting

Gold 2907

The precious metal closed the week in the red, posting modest declines. However, gold prices remain anchored close to the six-year high. This comes ahead of the FOMC meeting due later this week on Wednesday. We expect price to remain flat in the run to the event.

Price action has been forming a consolidating pattern near the top, forming a rising wedge. This potentially indicates a possible move to the downside as a result, in the event of a break down in prices.

In the short term, gold prices will be testing the 1440 level of resistance. Establishing resistance here ahead of a breakdown could signal a correction. The support level at 1420 will be the key support. This follows a breakdown lower to the 1360 handle eventually.

Crude oil see’s muted gains on the week

WTI 2907

Crude oil prices were somewhat subdued comparing to the losses from the week before. While oil attempted to rebound, the gains were limited. The overall outlook in crude oil still remains bearish.

The resistance level at 57.50 remains key in the short term. Although price action has tested this level briefly, we could expect to see another retest of this level in the near term. One of the reasons for the decline in oil prices comes due to the strength of the USD. This could see some volatility this week.

The downside in crude oil is quite clear. Price action is likely to slip to the initial support at 54.42. If this level holds, we could expect oil to turn flat and trade within the range. There is scope for crude oil to possible dip down to the 50.00 level eventually.

EURUSD testing the support

EURUSD 2907

The common currency remained weak closing Friday near the support area of 1.1110 – 1.1130 region. With support forming here, it is evident that the EURUSD could be looking to post some gains over the week ahead.

Watch the head and shoulders pattern that is forming near this neckline support. A rebound in the short term could push the EURUSD to test the resistance area of 1.1250. This is where the right shoulder could be forming.

If the price action remains bearish from 1.1250 region, we could expect to see prices breaking out from the support area. A breakdown below this level will indicate further declines. This could push the EURUSD down to 1.1000 region.

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