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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 24/07/19

Gold consolidates into a rising wedge

Gold 2407

The precious metal which posted strong declines last Friday has been maintaining a sideways trend. With price closing back below the support area of 1420, we see a rising wedge pattern taking shape.

In the short term, the consolidation is likely to continue. However, gold prices could see another push higher. Minor resistance at 1440 will be key. If price fails to breakout above this level, we could expect further declines.

The initial support to the downside will be at 1420. But there is a likelihood that this support will breakaway, giving rise to further declines. The next lower support is seen at 1360 which could be tested in the near term. A break down below this level will see gold extending declines to the 1320 handle.

Oil prices jump after API inventory report

WTI 2407

Crude oil prices continued to pare losses, posting gains for the second consecutive day. The fundamentals in the oil markets remain mixed at the moment. On one side, the tensions in the Straits of Hormuz continue. Tehran seized a British oil tanker.

However, investor shrugged aside the skirmishes. The American Petroleum Institute released the weekly crude oil inventory report. Data showed that there was a drawdown in crude oil stockpiles. API’s inventory showed a draw of 10.961 million barrels for the week ending July 18.

This was bigger than an expected draw. The rebound in oil prices saw a reversal back to the 57.50 level which previously served as support. If this level now acts as resistance, oil prices could be set to extend declines lower. The next main support is seen at 54.40

EURUSD posts strong declines to a two-year low

EURUSD 2407

The euro currency was seen pushing lower on Tuesday. Price action continued to decline sharply as the currency pair was seen hovering near a two-year low that was previously established.

The declines in the EURUSD comes in anticipation of tomorrow’s ECB meeting. The central bank is likely to give further clues on restarting its QE program with the probability of cutting interest rates as well. As a result, traders sold the euro, pushing it to a two-year low.

At the time of writing, the EURUSD is seen trading at 1.1140. If the declines continue beyond this level, the common currency could see further declines. Price action currently is validating the head and shoulders pattern formed. The downside target is seen at 1.1100 at the very least.

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