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Gold, Oil and EURUSD Weekly Analysis - Week 40

Gold confirms lower high, more downside in store

Gold 3009

The precious metal was seen closing last week with bearish declines. This follows a rebound the week before. On the daily chart, the price action in gold indicates that the lower high has been formed. This potentially suggests a decline lower in the coming weeks.

Friday’s price action was bearish which came after the doji candlestick pattern that was formed the day before. Support at the 1500 mark is currently being tested. Therefore, a breakdown below this level is essential to confirm the downside. We expect gold prices to eventually start the much anticipated correction.

The lower support area near 1440 will be closely watched. If gold prices move below the 1497 region we could expect the correction to continue. The decline to the 1440 support will mark a modest correction within the longer term uptrend that gold prices are in currently. However, there is also a risk of gold breaking below the 1440 level. In this case we expect the declines to move gold lower to the 1346 handle.

Crude oil bounces off the trend line

Gold 3009

Crude oil prices continue to remain bearish. However, the pace of declines to the downside is seen limited. Prices have been rejected quite strongly as and when crude oil attempted to dig lower. Currently, the trend line from the rising wedge pattern looks to be acting as dynamic support.

The fundamentals in crude oil remain bearish. Therefore, it is only a matter of time before oil prices resume the decline with some rising momentum. A breakdown of the lower trend line from the rising wedge pattern will suggest potential declines lower. Oil prices are likely to test the 50.00 psychological support at some point.

To the upside, due to the fact that the falling trend line has managed to hold the gains, we expect this to be limited. Watch for oil prices near the 56.00 – 56.50 region. If this support area breaks, then we expect the declines towards the 50.00 handle.

EURUSD could be looking for a bounce

EURUSD 3009

The common currency closed on Friday with some moderate gains. Price action was more or less confined to the range from Thursday. With the EURUSD trading near two-year lows, the Stochastics oscillator is potentially signal a turnaround in price.

With the bullish divergence currently building up, there is scope for the common currency to push higher. However, the price level of 1.0958 will need to be cleared. The EURUSD will also need to retest this level to establish support ahead of further gains.

We expect that the currency pair will be trading within the current lows and could test as high as 1.1111 region. A retest of this level will mark another attempt to breaking the resistance area. As long as the EURUSD is within this falling price channel, the outlook remains mixed with a possibility of a sideways range being established.

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