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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 06/01/21

Gold rises to two-month high

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The precious metal is posting strong gains as it approaches the key 1950 level. The gains in the precious metal comes on the back of new rising Coronavirus cases. This has threatened few countries in Europe including parts of Asia such as Japan into another lockdown. The risk sentiment has been supportive of gold.

Price action remains bullish at the current levels. However, there is key resistance level near the 1960 handle for the moment. We could expect gold prices to retrace gains following a test of this level. It will also potentially pave way for a possible bullish pattern.

A retracement back to the 1900 region could potentially signal the bullish cup and handle pattern. If this pattern is validated, then we expect the minimum upside in gold to be around 2150. This will mark another new high in the precious metal. Gold prices previously formed an all-time high in August 2020, after rising to 2075.

Oil rises above $48 as OPEC+ talks resumes

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WTI Crude oil prices are trading back above the $48.00 level on Tuesday. The rebound comes after a number of OPEC+ members, including Saudi Arabia opposed Russia's proposal for increasing production. The rebound comes as OPEC+ meeting started on Monday this week. Oil producers are debating on whether to extend the current production levels which is due to expire in February.

From a price action perspective oil prices are currently in a bullish pattern. There is a minor ascending triangle pattern that has emerged near the current highs. A successful breakout above this level could potentially signal further gains. This will put oil prices within reach to test the level of 54.00

A retest of the 54.00 level will mark the test of the unfilled gap from February 21, 2020. However, breaking past the 50.00 barrier will be difficult for oil prices. This is unless of course if price action is backed up by strong bullish fundamentals. To the downside, only a close below the 46.0 handle will see a shift to the downside bias.

EURUSD consolidates near current highs

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The euro currency is seen attempting to retrace the losses from last week. Price action is posting gains for the second consecutive day. This comes even as the euro currency trades near two and half year highs. But for the gains to continue, we should expect to see further highs forming.

There is also the triangle pattern that is emerging near the current highs. This could mean that a potential breakdown of prices is possible. Given that the Stochastics oscillator is forming a bearish divergence, there is a risk of a correction lower.

If the euro breaks down from the rising ascending triangle pattern, then we could expect to see a strong correction. The initial downside target will be around the 1.1900 level. However, measuring the recent uptrend, the 38.2% retracement level sits near 1.1670. Price action has been strongly bullish since the run up from late March 2020. Therefore, this makes the risk of a correction even higher.

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