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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 23/12/20

Gold stuck between 1900 and 1850

XAUUSD 2312

The precious metal is trading flat, albeit well settled above the 1850 level. Price action was a bit volatile at the start of the week after news broke of a new Coronavirus strain. This sent gold prices briefly to trade above 1900 before giving back the gains.

For the moment, the 50-day moving average is holding up the prices. It also sits close to the 1850 support level as well. As long as this support holds, gold prices are likely to continue their sideways range.

A breakout from this level is required in the near term. To the downside, a break down below 1850 will open the way for gold prices to test the 200-day moving average near 1800. To the upside, above 1900, gold prices will need to challenge the 1960 level from early November.

Oil prices drop off from a nine month high

WTI 2312

Oil prices are likely to move into a correction phase after rising to a nine-month high just last week. The gains came on the back of bullish market sentiment which saw oil prices trading close to the 49.00 a barrel.

The declines that set off on Monday saw a correction taking place. This is inline with the overall technical view. There has been no major test of support since the rally that began in early November.

Therefore, a continuation to the downside will see the previous support area near 42.00 being tested for support once again. As long as this support holds, the overall trend remains to the upside. But if oil prices lose the 42.00 support, then we could expect stronger declines.

Euro gives back gains as dollar strengthens

EURUSD 2312

The common currency is seen posting declines for a third consecutive day. Price action is pushing lower amid the U.S. dollar strengthening. This comes as a risk off sentiment has pushed investors to flight to safety. The dollar also ignored the fact about the new coronavirus stimulus bill announced by U.S. Congress.

If the current declines continue, then the EURUSD could be looking to test the 1.2000 level. A confluence of the 200-day moving average and the horizontal round number level could play a role in this minor correction.

The overall bias in the EURUSD will still remain to the upside as long as this support holds. However, we could see some major corrections happening as the next main support sits near the 1.1900 level. To the upside, unless the EURUSD breaks out above the previous highs near 1.2261, we could see the euro falling against the dollar in the near term.

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