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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 08/01/20

Gold breakouts higher as bullish momentum holds


The precious metal continues its bullish march as gold jumped to new highs. Prices briefly touched 1588 handle before easing back by Monday’s close. The gains in gold prices come on rising tensions between Washington and Tehran. This briefly sent equity markets lower but investors managed to overcome the initial reaction.

The current bullish stance in gold prices could eventually see price action testing the 1600 level. This will mark the longer term bullish flag pattern which formed on higher chart time frames. With prices currently near the 1556.88 region, there could be some consolidation taking place.

Any signs of a correction will see gold prices falling back to the lower support at the 1522.78 level. If support is established here, then gold prices need to break past the previous highs to post further gains. If gold remains range bound within 1522.78 and 1556.88 then we expect the bias to build only on a successful breakout from either sides.

WTI Crude oil retreats after initial rally

WTI 0801

WTI Crude oil prices rose sharply earlier in the week due to the rising Middle East tensions. Some bullish fundamentals also added to the rally as the US dollar was softening. Despite the pullback on Tuesday, we expect oil prices to remain bullish with the upside bias still in play.

The price level range between 63.0 and 60.64 will be interesting to watch. As long as the upper level of 63.00 is not breached, we expect oil prices to remain range bound within these levels. To the downside, a breakdown below 60.64 is required for a correction to take place.

Most of the gains in the coming weeks will be dictated by how the Middle East tensions are sorted. Also the weekly crude oil inventory report will be closely watched amid the broader narrative. Last week’s report showed a strong drawdown in inventory leading to gains in oil prices.

EURUSD settles into a range


After posting strong gains in the holiday week, the euro currency is seen continuously retreating, giving back the gains. The declines come amid a rising strength in the U.S. dollar. Economic data from the Eurozone over the week saw the release of the flash inflation estimates.

Preliminary report shows that consumer prices have increased strongly in January. But the euro did not react much to the news. With the resistance level of 1.1224 – 1.1200 not giving way, the euro has edged lower.

Price action is now trading flat within the levels of 1.1224 – 1.1200 and 1.1130 – 1.1111 levels. As long as this level holds, we do not see any big gains or losses. Watch the euro as it approaches the minor rising trend line. A breakdown below this level will trigger a move to the dynamic support off the major rising trend line.

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