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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 16/12/20

Gold prices gain as new stimulus plan proposed

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The precious metal is trading stronger on Tuesday following news reports from the US Congress that a bipartisan deal on a new Coronavirus stimulus bill would be agreed upon soon. This news comes after weeks of speculation in the financial markets that the US Congress would be coming up with a new stimulus bill. However, disagreements between the Senate and the house led to a stalemate. Still, markets have been hopeful.

After trading flat for nearly three consecutive daily sessions, gold prices are pulling back higher. At the time of writing, the precious metal is seen testing the price level of 1850. Disports gold prices within reach to test the 50 day moving average level. A strong close above 1850 could potentially open up further gains for gold.

Above the 1850 level, gold prices would next be targeting the 1900 level. If price action manage is to close strongly above this level, then we could see the previous uptrend resuming. This would mean that gold prices would likely be moving to retest the level of 2000. To the downside, gold prices are supported by the 200 day moving average which set around the 1800 level for the moment.

Oil prices advanced closer to 50.00

WTI 1612

WTI crude oil prices are advancing on a steady basis as they approach the psychological barrier of $50 a barrel. The gains come amid a backdrop of various fundamentals. The ongoing rollout of the coronavirus vaccine is talking hopes that the global economy will soon return to normal. This in turn is expected to raise demand for crude oil globally. On the other hand, a fuel tank in Saudi Arabia caught fire which also added to the bullish fundamentals.

Price action was initially stuck near the resistance level of 46.00. Following a few days of consolidation, price action managed to break past this key level. This has also led to a rebound in prices which has also triggered a Golden cross. A Golden cross is formed when the 50 day moving average cuts across the 200 day moving average.

At the current rate, the stochastics oscillator is firmly entrenched above the overbought level of 80. This could mean that price action could continue to move higher as it approaches the psychological barrier of 50.00. We could expect that the pace of gains will then reduce as oil prices are likely to make a retracement lower.

EURUSD advances closer to previous highs

EURUSD 1612

The euro currency has likely resumed its bullish uptrend following last week’s declines after testing previous highs of 1.2170. the gains in the common currency, mostly due to the US dollar taking a backseat. With new speculation of a stimulus bill being likely to be past in the US Congress, the US dollar is once again trading software.

This weakness in the USD is therefore helping the euro currency to move higher. However, we are noticing a bit of and exhaustion to the momentum at the current levels. Therefore, unless the euro currency can break out strongly above the 1.2170 level we could expect to see a stronger retracement to the downside. There are also indications of possible double top pattern forming.

As a result, it is essential that the euro currency is able to breakout higher. The stochastics oscillator has pulled back from above the 80 levels. However, there is still room for further upside. If price action continues with the current bullish trend, then we could expect to see the 1.2200 level being reached next. This would mark a new high for the EURUSD. The downside remains limited for the moment toward the 1.2000 leve.

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