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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 12/02/20

Gold trades slightly weaker, although near historic highs


The precious metal fully recovered from the sell over from earlier last week. However, price action remains trading below the previously established highs. Lack of clear fundamentals has kept  momentum in check, with no clear sign of a breakout yet in gold. The Fed Chair Powell also gave a speech, but prices were largely muted due to the neutral tone.

The current price action suggests a move lower. However, unless gold prices break below the lows of 1552.6, we could expect some sideways trading. A close below this level could confirm further downside in prices. We expect the declines to push through to the 1522.78 level where support could form.

Alternately, to the upside, the resistance level near 1572 remains firm for the moment. Unless there is a strong breakout above this level, price could remain biased to the downside.

Crude oil prices remain weak

WTI 1202

Oil prices fell after OPEC's Joint Technical Committee did not take any action. Contrary to rumours about cutting production in response to the Coronavirus outbreak, the JTC proposed that OPEC should continue with the current production cuts into June this year. Investors were hoping that OPEC would cut production in a bid to meet lower demand and to prop up oil prices.

Technically, price action has formed a near double bottom pattern at 49.42. A breakout above 52.00 should confirm this view. In this scenario, we expect the minimum upside in crude oil to be 55.42. This also coincides with the minor support level which could be tested for resistance.

To the downside, given that the Stochastics is well into the oversold level, we suspect a possible consolidation near the current lows. A breakdown below the 49.42 level could signal further declines into fresh bearish territory.

Euro remains bearish to the dollar


The EURUSD currency pair continues to post declines. The declines come largely due to a stronger dollar. The USD has been stronger, thanks to a patch of strong economic reports. For the Euro however, weak fundamentals continue to put the downside pressure. The currency pair fell to a fresh 2020 low earlier this week.

The common currency is failing to show any signs of a bullish move. Although price action looks somewhat bullish into Tuesday’s close, we expect the longer term range trading to continue. In the event of a correction, then the EURUSD will need to breakout above 1.0958 resistance.

Only a confirmed close above this level will signal a possible move to the upside. Price action could as well rise back to the 1.1129 – 1.1111 level to re-establish resistance at this level.

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