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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 05/04/19

Gold turns volatile

Gold 0504

Traders were taken by surprise after a volatile trading session that saw gold prices trading choppy and extending the range. The volatile move comes as weak long and short orders were tripped. After initially dropping to lows of 1280, gold quickly reversed losses to trade in the positive.

The overall bias for gold remains bearish in the medium term, but the short term outlook is likely to turn bullish. We anticipate a near term move to the upside which could see the price of the precious metal testing the key psychological level of 1300. We could expect to see the gains extending beyond this level.

The gains are expected as gold has consolidated into a falling wedge pattern near the current lows. The Stochastics oscillator is giving mixed signals at the moment. Therefore it is best to stay on the sidelines and wait for selling opportunities around the 1300 level.

WTI Crude oil likely to post a correction

WTI 0504

The gains in crude oil prices show that the bullish momentum is stalling near the highs of 62.00. The 4-hour Stochastics is showing a strong bearish divergence. However, we need to wait for price to confirm this.

A close below the 62.20 handle could see prices potentially extending the declines down to the 60.00 handle. This $2.20 drop could only be a small correction as the overall trend remains to the upside. Oil prices are likely to continue extending the gains to the upside.

The main upside target is seen at the 65 level where price is pending a retest of resistance. A reversal near the 65 handle could potentially confirm the end of the uptrend as we anticipate a move lower. The main longer term objective is a decline to the 53 handle.

Euro erases gains

EURUSD 0504

The euro currency was seen giving up the gains from the day before. Price action remained weak amid reports of the ECB meeting minutes which showed that officials are taking notice of the slowdown in the Eurozone. The euro currency continues to remain trading in a range with no respite from the sideways pattern.

Price action has settled back into the support area of 1.1224 – 1.1200 level. But we expect this support level to hold in the near term. As long as the euro remains firmly within this range, we could expect to see another attempt for price to move to the upside.

The trend remains bearish for the moment but there is scope for the euro currency to potentially extend the gains to test the falling trend line around the 1.1400 level. With price action forming into an inside bar on Thursday, we expect to see a breakout trade emerging as a result.

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