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Gold, Oil and EURUSD Weekly Analysis - Week 51

Gold steadies below 1850

XAUUSD 1412

The precious metal was trading flat for two consecutive days following a brief rise above the 1850 level earlier in the week. Overall, price action remains rather muted amid various narratives. Investors continue to wait in anticipation of the U.S. Congress to pass the additional Coronavirus stimulus bill. As a result, the market sentiment remains a bit mixed.

On the daily gold chart, we can see a hidden bearish divergence on the Stochastics oscillator. Given that this reversal pattern comes near the 1850 level of resistance, price action is likely to push lower. For the moment, the 200-day moving average near 1800 will be the key support level.

If gold prices break down below this level, then we could expect to see prices touching down to the 1750 level of support. This level was not tested firmly in late November. As a result, a decline to this level could confirm a continuation to the downside.

WTI crude oil pull back after testing 48.00

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Oil prices closed with modest losses on Friday. This comes after prices briefly rose close to the 48.00 level on Thursday. The gains come as investors expect the vaccine rollout to open up global economy including air travel. The upside bias in WTI crude oil remains strong.

The Stochastics oscillator on the daily chart remains flat in the overbought levels. Therefore, there is a chance for oil prices to pullback. We could see the 42.00 level being tested once again for support in the short term. Establishing support at this level could be crucial for oil prices to post further gains.

In the alternative scenario of losing the 42.00 level of support, the oil prices could be heading lower. However, this is unlikely to happen with both the 50-day and the 200-day moving average sitting close to this level. It could offer dynamic support for prices.

EURUSD bounces higher but fails to make new highs

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The euro currency managed to recover from the losses offset by the ECB meeting. However, price action failed to make any big gains. As a result, prices closed in the red on Friday. This comes as the Stochastics oscillator remains flat in the overbought levels above 80. It could suggest a possible correction.

For the moment, the price level near 1.2100 remains critical. As long as this swing low is not breached, the euro currency could push higher. In the event that the euro loses the 1.2100 level, then we could expect prices to make a larger correction. The next key support is at the 1.1900 level.

Here, we also see a confluence of the 50-day moving average. It makes it a prime target for a correction in the EURUSD. If the euro loses the 1.1900 support, then we could expect a larger correction that could push the euro down to the 1.1600 level next.

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