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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 06/05/20

Gold prices trade flat as risk appetite improves


The precious metal is trading flat as a stronger dollar and rising risk appetite are putting gold on the sidelines. With various economies reopening for business, investors are expecting a road to recovery. Although the US and China tensions remain in the forefront, investors are currently not expecting to see much of a damage from this rhetoric.

Price action is on track to close flat on the day. This would mark a second consecutive session where gold prices could close flat. But this suggests that the upside could be diminishing as prices continue to trade below the key price level of 1708.56.

For the downside, price needs to post a strong decline to confirm the move lower. The downside target is at 1643 where support will be most likely established. However, it could be a bit too early to write off any upside in gold. In the event that gold prices push above 1708.56, we expect to see a possible continuation to the uptrend. But once again, price action will have to rise above the previous highs of 1738.60.

Crude oil prices gain for fifth consecutive day

WTI 0605

Oil prices are up over 18% on the day, marking a fifth day of consecutive gains. The gains come amid developing bullish fundamentals, a contrast from just a few weeks ago. Factors such as recovery in demand and production cuts from OPEC+ are some of the reasons for the oil prices to gain sharply. It also coincides with most of the world economies re-opening for business.

The current gains in oil prices comes amid the double bottom pattern that was in place. At the current rate, oil prices could be targeting the 28.00 level. This will mark the minimum upside of the double bottom pattern. However, following this, we expect oil prices to settle into a range.

The current levels of 28.00 and 20.00 will most likely form the new short term range for WTI crude oil. A breakout from this level will be needed to confirm further upside or downside in prices. The bias continues to remain mixed at the moment. Most likely, the ongoing fundamental developments will be key in setting the direction in oil prices.

Euro eases amid dollar strength


The euro currency is trading weaker on the day as the trade weighted US dollar index is posting modest gains. The sentiment in the euro was also weaker as some academicians from Germany are challenging the ECB's bond purchase program.

The euro currency is down for the second consecutive day. This marks a reversal of the gains made from the previous sessions. A continuation lower could see the EURUSD falling back to the support level of 1.0784. As long as this support holds, the EURUSD could remain trading range bound.

However, in the event that prices break the support, we could expect further declines. For the moment, the bias in the EURUSD remains mixed with no clear indications of the trend just as yet. As a result, we could continue to see prices chopping around within the levels of 1.1000 and 1.0784

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