Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 18/12/18

Gold remains in limbo

Gold 181218

Gold prices reversed the declines mid-way after breaking out from the median line. Price action recovered around the 1235 handle where the Ichimoku cloud managed to serve as a strong support. This reversal took gold prices back to test the main level near the 1250 handle.

However, the consolidation near this level is indicative that the risk is now equally balance. While to the downside, the support at 1228.00 is yet to be tested, a breakout above 1250 could potentially open the way for gold prices to further continue the rally.

This could happen if support can be formed near the 1250 handle. In the event that gold prices fail to make a clean break above 1250, we could expect price action to eventually turn lower as a result. Watch for a break down below 1240 which will accelerate the declines to the 1228.00

Crude oil makes a downside break

WTI 181218

WTI Crude oil prices, after weeks of trading in consolidation between 54.00 and 50.00 has breached the downside. The second day of declines are currently pushing crude oil prices to close outside the lower range of $50.

The bearish price action now opens the way for crude oil prices to extend declines to the $42.50 handle where the next main support is pending a retest. In the near term, any rallies are likely to see new buyers entering the market. This could potentially put more downside pressure in the WTI crude oil market.

The minimum downside off the breakout near $50 handle is $46.00 with an eventual exepectation of a test to the $42.50 region. In the event that WTI Crude oil manages to close back above $50, the consolidation could keep prices flat once agian.

Euro continues to be directionless

EURUSD 181218

The common currency continues to post a tight range with no direction in sight. In the medium term, the EURUSD is seen trading within the 1.1450 - 1.1200 region. This could potentially mean that the euro still has a long way to go.

However, watch for a breakout from within these levels which could validate the next direction in the trend.

The overall longer term bias is to the downside but this will be validated only on a breakdown below the 1.1200 handle. With the EURUSD market trading very choppy, it is best to remain on the sidelines until a clear trend emerges from this ranging market. The risk is balanced as the current consolidation could result either in the bearing trend being resumed or a bullish trend reversal.

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