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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 19/02/20

Gold breaks out to the upside

XAUUSD 1902

The precious metal, which has been consolidating within the triangle pattern finally broke out to the upside. The upside breakout suggests that the uptrend is back in play. This means that XAUUSD could potentially reach towards the 1640 handle which seems likely at this point.

The gains in gold prices came as equity markets turn weaker. Investors are concerned that the Coronavirus outbreak will have far reaching consequences on the global economy. With the upside breakout, the longer term bullish flag/pennant pattern is validated.

Until price reaches the 1640 level, we do not expect to see any downtrend or a strong correction taking place. As a result, any dips in the uptrend will attract new buyers into the markets.

Crude oil struggles to breakout above resistance

WTI 1902

Although oil prices have turned somewhat bullish, the upside momentum is lacking. Price action is stuck near the resistance area of 52.00 as the consolidation near the trend line continues.

However, oil investors could remain cautious going by the global narrative. Another bout of weaker demand will potentially see further selling in the commodity. Later in the week, the crude oil inventory report is due to come out. This could potentially act as a catalyst in the short term.

For the moment, we maintain the upside bias. A breakout above 52.00 is required for crude oil prices to aim for 55.22 level. This will mark a healthy correction to the decline. Following this, price action could settle into a sideways range between 55.22 and 52.00.

EURUSD slips to new multi-year lows

EURUSD 1902

The common currency’s downtrend continues to remain strongly entrenched. Price action fell to a new multi-year low, last since 2017. The declines come as Europe could be hit economically due to the weak demand.

Economic data from the Eurozone continues to remain weak, adding to the downside. With a global risk appetite rising, investors are bidding up the U.S. dollar. We expect price action to consolidate lower into 1.0750 level.

In the longer term, it is likely that the EURUSD is consolidating and is close to forming a bottom. In terms of the near term resistance, the price level near 1.0900 will be critical in stalling gains in the common currency.

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