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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 18/12/20

Gold rises on stimulus bets


The precious metal rose over one percent intraday on hopes that the U.S. government will release a new stimulus package. The gains come a day after the Federal Reserve meeting. The main outcome was that the central bank is not yet convinced about an economic recovery. On the stimulus side, lawmakers said on Wednesday that they were closing in on a $900 billion Covid-19 assistance package.

After consolidating for a few days near the 1850 level, gold prices resumed their bullish uptrend. At the time of writing, gold prices are approaching the key resistance level of 1900. We expect price action to initially stall near this resistance level. However, in the unlikely event of prices pushing higher, then we would see a continuation to the upside.

In the other scenario, where gold prices will stall near the 1900 level we could expect price action to maintain a sideways range. This would see gold prices trading between the levels of 1900 and 1850. Still, the bias will remain to the upside as the US dollar continues to weaken.

Oil rises to a nine-month high on inventory draw

WTI 1812

WTI crude oil prices advanced to a nine-month high on Thursday. The gains came after the weekly crude oil inventory report showed a drawdown in oil inventories. Elsewhere, demand for oil is also boosting prices. Most of the demand is coming from Asia, with three of India's oil refineries already reaching full capacity.

Oil prices are already holding on to a bullish streak. So far, oil prices have posted nearly four consecutive days of gains. This has pushed oil prices closer towards the psychological barrier of 50.00. We expect that the continuation to the upside will push oil prices closer to this level.

There is however a risk that price action could correct lower. For the moment, the initial downside could see prices testing the new support level that could form near 46.00. As long as this support level holds, there is scope for further gains. However, if oil prices slipped below the 46.00 level then we could expect to see a larger correction down to 42.00.

EURUSD maintains bullish hold


The euro currency was seen rising past 1.2200 this week. The gains come following a broadly weaker U.S. dollar. The ongoing EU and the UK Brexit talks are also adding to the bullish pressure. This is making the euro quite bullish, especially against the dollar.

The euro currency has been consolidating around the 1.2100 levels for the past few sessions. However, price action has managed to break out from this range to the upside. Following a successful move above 1.2100, the euro currency managed to easily break past the barrier of 1.2200.

At the current rate, we can see a small bullish flag pattern that has emerged. This could easily push the EURUSD to new key levels near 1.2500 next. For the moment, the stochastics oscillator is also quite supportive of the upside momentum in the eurocurrency. Unless we see evidence of price action forming a top, the euro is likely to continue to remain bullish.

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