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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 24/05/19

Gold retests 1285 resistance as the head and shoulders pattern evolves

Gold 2405

Gold prices bounced sharply on Thursday as price action posted strong gains. This led gold to reclaim the 1285 level which is currently being tested as resistance. If we get to see a reversal near this price level we expect a possible decline in the near term.

The current retracements to the 1285 handle comes as gold prices have held the support at the 1270 region, forming a possible neckline support of the head and shoulders pattern. A successful reversal near the 1285 region could potentially signal a decline back to the 1270 region.

If the declines continue, then gold is likely to break past the 1270 handle. This will see the precious metal extending declines lower to test the 1240 region which is the minimum downside objective for the price pattern. This also falls in line with the long term view about a corrective move to the 1240 – 1250 region.

Crude oil slips to 57.50, but needs to test the level more firmly

WTI 2405

WTI Crude oil prices were down over 5% on the day on Thursday. The decline in price sent oil prices to test the support level of 57.50. Following a brief test to this level, crude oil prices posted a pullback briefly.

If the pullback is maintained, then WTI crude oil could be seen extending the retracement to the 60.64 handle which previously served as support. Establishing resistance at this level will indicate the downside bias in oil prices.

A firmer retest of the 57.50 handle is required in order for oil prices to establish support more firmly. There is scope that oil could slip further, potentially to the 50.00 handle. However, this will depend on how price behaves near the 57.50 level of support.

Euro recovers from yearly lows

EURUSD 2405

The common currency posted a strong reversal as it fell close to the 2019 lows. Prices slipped to 1.1184 on an intraday basis before pulling to close with gains. However, price remains caught below the resistance area of 1.1200.

The subdued price action is likely to persist in the near term. As long as the resistance level is not breached, the EURUSD is likely to maintain its range below this level while extending the risk of easing back to the previously established lows.

A close above the 1.1200 handle would however shift the bias to the upside, but the medium term outlook remains flat.

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