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Gold, Oil and EURUSD Weekly Analysis - Week 4

Gold prices continue to consolidate near the highs

XAUUSD 2001

The precious metal is seen forming a holding pattern near the top with price action confined to the range and consolidating. This potentially indicates a possibility of a breakout in the near term. Speculation is on whether this will see gold rising to new highs or if prices will retreat.

The bias remains mixed at the moment as the Stochastics oscillator is also seen rather flat, suggesting no momentum. However, given the possibility of a consolidating near the highs, we can only assume that the uptrend could likely come into play again.

To the downside, the decline in gold prices will see a corrective move to the 1522.80 level of support initially, followed by a decline to the 1497 region. With a number of central bank meeting lined up over this week, we could expect this to be the fundamentals that will give the much needed momentum in gold.

Crude oil prices consolidate near the trend line

WTI 2001

Crude oil pries have bene posting some modest gains in the past few sessions. However, the gains remain muted compared to the strong previous price action in weeks before. Technically, we could expect this consolidation to result in either a downside breakout or a possible rebound off the trend line.     

The Stochastics oscillator remains in the oversold level. However, there is chance for the downside momentum to be renewed once again. This will mean that oil prices could slip to the lower support area of 56.00. At the same time, the current consolidation could also morph into a bearish flag pattern.

To the upside, price action needs to rebound strongly to give any sense of direction. Still, price action will be limited to the resistance level of 60.64. Given the failure at this level initially, we expect oil prices to resume its subdued range for now.

Euro falls on USD strength

EURUSD 2001

The euro currency fell sharply on Friday, mostly because of a stronger USD. Economic data from the Eurozone was positive with the final inflation estimates confirming that inflation rose 1.3% on both the headline and the core. Still, the common currency failed to make any progress.

The current declines in the EURUSD confirms that the short term downside is building up. This means that price action is on track to test the lower rising trend line. We can see a confluence of the horizontal support and the dynamic support of the trend line near 1.1050 region.

A breakdown below this level will see the euro currency extending the declines down to the next main level near 1.0958. Overall, the currency pair is likely to settle back into a sideways range after some modest gains made late in December last year.

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