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Gold, Oil and EURUSD Weekly Analysis - Week 41

Gold closes the week with only modest gains

Gold 0710

The precious metal managed to close the week on a bullish note. However, the pace of gains was subdued in comparison. The gains come after gold prices closed in the red the week before. The declines came mostly on Friday after the U.S. payrolls report turned out better than expected.

On Friday, gold closed with a doji pattern indicating indecision in the markets. This comes within the key price level of 1522 – 1497. We need to see a bearish close following this in order to confirm the downside. Furthermore, gold prices must close below the 1497 level in order to convince that the correction in underway.

The lower support area of 1440 remains within reach. Given that gold prices formed a lower high and assuming that the current gains stall at Friday’s close of 1503, we could expect to see prices breaking down lower. There is however, a risk that gold prices could breakout higher above 1522. This will diminish the chances of a lower correction.

Crude oil loses over 6% during the week

WTI 0710

Crude oil prices maintained the bearish trend, losing over 6% on the whole over the week. The declines in crude oil prices come amid weak demand for oil and rising inventory levels. Last week’s EIA report showed a surprise build up in inventory. This kept oil prices in check.

The weaker U.S. dollar during the most of last week also failed to push oil prices higher. By Friday, crude oil prices fell to an eight-week low. Price closed at $52.91 marking a modest rebound by Friday’s close. The price action on Friday was somewhat bullish.

A bullish follow through from here is required in order to confirm the upside. We expect to see oil prices rising towards the initial breakout price area of 56.00 if the momentum can be sustained. To the downside, oil prices haven’t tested the psychological 50 level of support level.

EURUSD settles above support

EURUSD 0710

The common currency took advantage of a weaker U.S. dollar and as a result managed to close the week with some moderate gains. On the daily time frame, the EURUSD is seen to have settled above the support level of 1.0958.

As long as this support holds, the EURUSD could expect further upside. The daily Stochastics indicate the bullish divergence. The Stochastics oscillator posts a higher low against the lower low in price. This signals a move toward the next resistance level of 1.1129 – 1.1111.

However, in the event that the EURUSD slips below the 10958 level we could expect to see further declines coming along. The initial support will be the preciously established lows of 1.0900. A breakdown below this level will signal further declines in the near term.

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