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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 15/01/21

Gold prices continue to stay muted

XAUUSD 1501

The precious metal is trading flat now for the fourth consecutive daily session. Price action is strongly consolidating near the price level of 1850. This consolidation likely indicates that there will be a strong breakout in the near time. As a result, the bias remains mixed for the moment, although we continue to wait for the bullish Cup and handle pattern to formulate.

Given the fact that the stochastics oscillator on the daily chart is near the oversold level, a bullish crossover on the indicator could potentially suggest further move to the upside. This would mean that gold prices need to rise strongly above the 1900 level. Or close above this level will potentially confirm further upside.

However, the precious metal will need to eventually break out above the 1950 handle in order to confirm the bullish Cup and handle pattern. To the downside, if prices lose the support from the 200 day moving average, then we could expect to see a decline towards the 1750 level. In this event, the bullish bias in gold remains invalidated.

Oil price is likely to post a correction

WTI 1501

WTI crude oil prices are trading weaker following the sharp gain towards the 53.3 one level following a breakout above this level briefly, oil prices tested close to the 54.00 level before giving back the gains. At the time of writing, oil prices are currently trading bearish. However, we expect oil prices to close down below 52.00 in order to confirm the downside.

Such a move will validate the downside correction in oil prices. This will now open the way towards prices testing the 49.50 level which mark the previous resistance level from which price action broke out from. However, there is scope for oil prices to post further declines.

To the upside, if there is a reversal then we could expect to see prices rising to the handle of 55.00. This would mark a new high for oil prices which have been quite volatile last year. The stochastics oscillator continues to remain in the overbought levels and therefore could trigger a short-term correction in price action.

EURUSD declines stalled near the 50 day moving average

EURUSD 1501

the euro currency resumed its declines following a flat price action trading for the previous three sessions. However, the current pace of declines remained rather subdued in comparison. Furthermore, we also see that the 50 day moving average is likely to act as a strong level of support for prices.

With the stochastics oscillator now posting a possibly hidden bullish divergence, we expect to see a possible move to the upside. However, the euro currency will need to rise above the previously posted highs above 1.2300 in order to confirm further gains. If the euro currency fails to do so, then we could expect to see a possible correction lower.

The key will be the 50 day moving average. If the euro loses the support here, then we expect to see a correction that could push the common currency down towards the 1.1900 level of support. Establishing support here will continue to see the long term upside by us still being in place.

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