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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 07/10/20

Gold prices steady following concerns on president trump health

EURUSD 0710

The precious metal is posting gains for a second consecutive day. The gains come after over the weekend the US president trump was reportedly admitted into the hospital due to the coronavirus. The gains come after gold prices fell close to the 1850 level of support earlier last week. The current gains however are challenged by the 50-day moving average. A breakout above this level could see the minor trendline being tested once again.

If the current bullish momentum continues, then we expect the trend line to be broken which will then shift the bias in gold to the upside. This price action setup will then put focus on gold in challenging the 2000 level once again. However, the bullish momentum is unlikely to sustain in the short term as long as price trades below the trend line.

Given the positioning in the stochastics oscillator, we could expect prices to reverse direction shortly. This will depend on how prices close on Tuesday. A doji close here followed by a bearish candle stick on Wednesday, will confirm the reversal near the current levels of 1900. This will in turn confirm a move back to the 1850 level in gold prices in the near-term outlook.

Crude oil prices rise for a second day

WTI 0710

Oil prices are trading bullish for the second consecutive day following the selloff in the final part of last week. Part of the gains come on the back of a weaker US dollar. Crude oil prices are back to testing the 200-day moving average. If there is a successful breakout above this level followed by a breakout above the 40 level of resistance, then we could see further gains to the upside.

For the moment however, we expect that the resistance level which has a confluence of the 200 day moving average, the 50 day moving average, the 42 level of resistance will put a lid on the gains in oil prices for the short term. A strong close above this level is only possible with price action driven by fundamentals.

To the downside, oil prices will once again battle the previous lows near the 36 level of support. However, bear in mind that we have a double bottom pattern that has formed. As a result, if there is an upside breakout above 42, then we expect oil prices to rise towards 46.00. The stochastic oscillator is also pointing to the upside inferring that the bullish momentum is strong for the moment.

EURUSD edges closer to 1.1800

EURUSD 0710

The euro currency managed to post strong gains on Monday. However, price action is looking rather subdued on Tuesday. This is despite the fact that price action has formed support above the 50-day moving average. The reversal in the EURUSD comes on the back of a weaker greenback. The US dollar has been weakening on speculation of a new stimulus bill by the US Congress.

At the current rate, the EURUSD currency pair is likely to test the 1.1800 level where resistance is most likely to form. We also see and evolving hidden bearish divergence forming on the stochastics oscillator. This could suggest a near term reversal in prices. The lower support level is now near 1.1600 handle.

However, in the near term the currency pair might maintain a range between 1.1800 and 1.1600 levels. Only a breakout from this range will establish further direction in the trend for the currency pair. In the event that the common currency closes above 1.1800 then the next upside target is near 1.1900. This is when the bias will start to shift to the upside.

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