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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 22/01/20

Gold prices signal a top is forming

XAUUSD 2201

The precious metal has been stuck near the top, albeit short of making any fresh highs. Overall price action remains rather flat suggesting that perhaps the bullish momentum is fading. However, with the bias remaining mixed at the moment, we expect to see either a breakout, leading to fresh highs or perhaps a correction.

Lack of economic data is also one of the reasons why gold prices have been trading flat. Following the U.S. signing of the China phase one trade deal, there has been little to none major market moving events. For a technical outlook, we see that the consolidation is taking place near the 1558.00 region.

As long as this resistance holds out, we do not expect to see any fresh highs being made. The bias remains to the downside with the possibility of a breakdown to the 1522.80 level. This is a likely level where gold prices could find support. Failure to stem the declines could push gold prices down to 1497 handle.

Crude oil continues to trade weak

WTI 2201

Oil prices are trading weaker as the bearish momentum continues. A report from the U.S. Energy Information Administration (EIA) showed that oil prices could turn lower. The assessment comes amid lack of any major geo-political events. According to the report, Brent crude oil prices could average around $62 a barrel by May this year.

The attacks on Saudi Arabia oil facilities alongside the U.S. attacks on Tehran saw a spike in the risk premia. But started to fall as tensions were quickly de-escalated. This could potentially mean that oil prices will remain trading rather flat in the near term.

Currently, price action is consolidating near the rising trend line. Failure to post any upside gains gives rise to the downside bias. However, price needs to break strongly below 58.00 to confirm the downside.

EURUSD trads flat below resistance

EURUSD 2201

The common currency has been trading flat for the last two days. The consolidation comes right below the resistance area of 1.1129 – 1.1111 region. The overall bias is currently to the downside. This comes despite some better than expected economic reports from the Eurozone.

The recent ZEW economic sentiment showed a rebound in the economic sentiment index for both the Eurozone and Germany. However, later this week, the ECB meeting will be main event to watch. We expect the EURUSD to remain trading flat in the run up to the ECB meeting.

For the moment, the downside will be capped by the dynamic support of the rising trend line. But if this fails, we could expect the EURUSD to slip to the 1.0958 level of support eventually. A minor support is likely to form near the 1.1000 level however.

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