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Gold, Oil and EURUSD Weekly Analysis - Week 47

Gold prices snap a three day winning streak

XAUUSD 1811

The precious metal closed on Friday with some modest declines, snapping a three day recovery that went on earlier in the week. The declines came as investors unwinded their positions into the end of the week. However, the market sentiment remains mixed at the moment.

This puts gold bias to be mixed. On a weekly basis, gold managed to rebound higher following the previous week’s declines. However, the price level at 1497 will be key to watch. If prices rally to this level, then resistance needs to hold the gains in the short term. This will put the bias back to the downside.

Alternately, if the 1497 level breaks away, then gold will likely test the upper levels of resistance. This will make price action trading flat once again. Unless gold posts fresh highs, the consolidation near the highs will continue. To the downside, the 1440 level of support remains key if the 1497 resistance holds.

Crude oil prices continue to inch higher

WTI 1811

Oil prices managed to recover from the mixed trading over the week and closed on Friday with some modest gains. However, the gains are quite mixed with trading seen choppy. We continue to watch the head and shoulders pattern that is taking shape with the neckline support at 52.00.

The fundamentals in the oil markets also remain mixed. While on one hand, the weekly crude oil inventories continue to post a build up, the overall demand for crude oil is expected to rise. This comes after the EIA released a report last week. It noted that demand for oil will rise in the year ahead.

For the moment, crude oil is trading based off the short term fundamentals. The U.S. and China trade wars remains a key element for the oil markets. The head and shoulders pattern can be invalidated if the gains continue. But there is scope for price to rise back close to the 60.00 level.

EURUSD reverses losses

EURUSD 1811

The common currency managed to buck the trend and posted a strong reversal into Friday’s close. The gains were solid but further continuation of the upside momentum is unlikely at this point. 

Unless we get to see a strong continuation, the resistance level near 1.1111 will keep a lid on the gains. The gains came mostly due to a weakness in the U.S. dollar. This was due to lack of progress on the U.S. and China trade talks.

The daily Stochastics is showing a hidden bullish divergence. This gives some basis for the upside to continue. But unless the EURUSD clears the resistance area of 1.1111 region, we expect that price will continue to trade rather flat within the current levels.

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