Gold, Oil and EURUSD Weekly Analysis - Week 7

Gold prices recover some of the losses


The precious metal managed to rebound into the close of the week. This comes after three days of recovery after the initial sell off. Price action is seen closing back near the price level of 1571.50 into Friday’s close. The rebound comes on a mix of factors. Most importantly, investors remain cautious on some global themes despite equities rising to new highs.

Currently, the price action in gold indicates a key level in the trend. If price breaks out above the 1571.50, then we expect the bullish trend to continue. But there is also scope for a fake breakout to the upside before prices move back lower. The daily Stochastics remains a bit bullish adding weight to this bias.

Alternately, if prices do indeed move lower, then we expect a move toward the 1522.80 region. Establishing support here will potentially renew the uptrend. This is also consistent with the bearish divergence seen on the charts, which suggests a potential decline to the 1522.80 handle.

Crude oil struggles below the $52.00 handle

WTI 1007

Oil prices are experiencing one of the worst declines this year. Price action continues to remain bearish. Although there were attempts to recover the losses, the resistance level of $52.00 is proving to be hard to break. As a result, crude oil prices are seen consolidating below this level.

Meantime, in the coming week, Russia is expected to take a decision on whether to agree to production cuts. This comes amid calls from other OPEC member nations in the light of the slower demand due to the coronavirus. Crude oil prices have fallen sharply over the two months this year.

For price action to post any recovery, it must close above the 52.00 handle. However, the Stochastics on the daily chart remains well oversold. Therefore, we could expect to see some sideways price action taking place at this level. However, the declines look to be contained for now.

EURUSD finally tests support level


The common currency is finally back at the support level of 1.0958. This comes after months of sideways price action which also briefly sent the common currency higher. The declines to the support area came amid a strong sell off. With the bearish trend in place, there is possibility for EURUSD to briefly break below this level.

However, we expect to see a rebound in the price action in the near term. The daily Stochastics is indicating a possible bullish divergence. But given the sideways range in EURUSD, the gains can be limited for the moment. The upside will see a retest back to the 1.1111 region where resistance is firm.

To the downside, the next level is at 1.09000. This was tested a few months ago and could likely be tested once again. But overall, the declines in the EURUSD look to be nearing an end.


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