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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 23/08/19

Gold consolidates near the top

Gold 2308

The precious metal made little moves for the most part this week. Price action remains strongly entrenched near the highs. However, the gradual decline is showing that the consolidation could morph into a bullish pennant pattern.

Regardless, gold will have to clear the previously established highs above 1520 in order to confirm further upside in price. Alternately, if gold slips below the 1500 level, we could expect to see the correction starting.

The lower support at 1440 remains within target in such a scenario. But we expect that gold could post a modest rebound to retest the 1500 handle and establish resistance. This will give the declines more meaning and could signal the start of the move to the downside.

Oil remains weak as inventory report showed a build-up

WTI 2308

Crude oil prices were trading flat. The weekly inventory report from the U.S. Energy Information Administration showed that there was a build-up in the inventory. This came after two weeks of a drawdown. Oil prices however remained muted, but the bias remains bearish.

The current price action suggests that oil prices are consolidating near the previously established support area. The rest of this level could likely convert this level into resistance. Thus, oil prices could remain range bound within 56.00 and the support at 52.00.

Unless price action clears this convincingly, we expect crude oil to remain trading within these levels in the near term. The bias could however shift, if there is an upside breakout. A close above 56.00 where price is currently trading could signal further upside to the 60.00 handle.

Euro trades flat but below resistance

EURUSD 2308

The euro currency was seen trading rather muted, right below the resistance area of 1.1129 – 1.1111 level. Failure to clear the resistance level could mean that the common currency will see further downside.

The currency pair failed to capitalize on the gains after the Markit’s flash manufacturing and services PMI came out better than expected. However, the overall economic outlook for the Eurozone remains weak. The flat price action is expected to continue into today’s session.

The major line up of events include the Fed Chair, Jerome Powell giving a speech and the conclusion of the Jackson Hole symposium. Comments from central bankers will likely bring some volatility to the EURUSD currency pair.

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