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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 06/02/19

Gold likely to edge lower on the head and shoulders pattern

GOLD 060219

The rally in gold prices saw the precious metal testing fresh highs above 1325 levels last week. The momentum in the rally has stalled since then and gold has been drifting lower. The short term technicals show that gold is currently trading sideways within 1320 and 1300 levels.

However, on the 4-hour chart, there is a possibility that a head and shoulders pattern is forming. The neckline support is seen forming at 1310. If this support breaks, we could expect gold prices to validate the head and shoulders pattern which could put the minimum downside toward 1295.

But given that the next main support below 1300 is at 1280, we could expect gold prices to drift lower. The bearish bias will be invalidated if gold prices manage to regain the support at 1300 and bounce higher. This would put the price action into a consolidation mode once again.

Crude oil consolidating into a rising wedge pattern

WTI 060219

Oil prices have managed to maintain the gains above the 54 handle over the past few days. This was largely due to the developing fundamentals in the oil markets. The latest sanctions agains Venezuela which could ban countries from trading oil with the nation could put further pressure on oil prices.

However, for the moment, we expect the rally in oil prices to take a breather. It is clear that the rally above the 54 handle is unsustainable at the moment. This was evident from the fact that oil prices failed to hold the support above 54.

As a result, price action has consolidated into a rising wedge pattern. This pattern signals a potential bearish decline in the near term. A breakdown from the rising wedge pattern could triggern oil prices to eventually test the 50 level of support.

Establishing support at this level could then keep oil prices trading within the range of 54 and 50 in the near term.

EURUSD to test 1.1360

EURUSD 060219

The common currency failed to hold on the gains logged following the upside breakout from the falling price channel. As a result, prices quickly reversed direction and started to drift lower. After failing to hold on to the support at 1.1450 the common currency extended the declines.

This puts the next target level of 1.1360 within reach. This marks a retest of the breakout from the falling price channel. If the euro could maintain the support at 1.1360, we could expect some sideways consolidation taking place within 1.1360 and 1.1450. But in the unlikely event of a break down below 1.1360, then the common currency could extend the declines even lower. The next main support is seen at 1.1312 level.

Note that the developing head and shoulders pattern remains intact for the moment. The neckline support is seen at 1.1312 - 1.1282.

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