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Gold, WTI Crude oil and EURUSD - Intra week technical outlook

Gold - Is a correction in order?

Gold 121218

Gold prices maintained the gains near the top end of the rally. After initialy testing the peak neat 1248, gold prices gave up some of the gains. However, the rebound off the lower median line sent gold prices rising back to the 1248 handle. Failure to break past this handle pushed prices lower again. Gold posted a mdoestly lower low near 1242 before rebounding on the 4-hour session earlier in the day.

The price action indicates that gold is now trading within the range of 1248 resistance and 1240 support. A breakout from this level is needed for gold to establish the direction.

We expect to see a downside breakout due to the strong rally which requires a much needed correction. Watch for a break down below 1240 which will extend the declines to the 1228 handle. The 1228 price level previously served as resistance and is a prime area for a retest of support.

The downside bias is invalidated if gold prices breakout past 1248.

Crude oil - Watch the $54.00 handle

WTI 121218

Oil prices have settled into a range with the resistance level established at the $54.00 handle. Multiple attempts on the 4-hour chart indicate that price has failed to breakout from this level.

As a result, WTI crude oil has settled into a range between $54.00 and $50.00. A breakout from this range will certainly establish the next direction in the trend. Given the strong declines, the bias is to the upside. A potential breakout from $54.00 handle could see oil prices rising toward the $58.00 handle. This could mark a moderate correction in the trend.

The longer term target is however at $64.00 handle which could be tested if the bullish momentum is retained. Alternately, to the downside, we expect oil prices could slip back to the $50.00 handle but maintain the ranging price action overall. The declines could accelerate if oil prices break past the $50.00 handle.

EURUSD - Buying time ahead of ECB meeting

WTI 121218

The common currency is seen maintaing its range within the broader triangle pattern that has formed. Price action briefly tested the highs of the triangle before giving up the gains.

We expect the common currency to hold this range into tomorrow's ECB meeting. The lower support at 1.1200 remains a prime target to the downside but overall trend looks to be forming a bottoming pattern. An unlikely break below 1.1200 could however put the EURUSD on path to face further declines and perhaps fall to fresh lows.

In the short term, however, watch for the break of the resistance level at 1.1450. A close above this level and a potential retest of support at 1.1450 could signal further gains.

The EURUSD could be looking to post an upside correction on a successful breakout above 1.1450. However, this is unlikely to happen until the outcome of the ECB's meeting tomorrow.

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