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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 26/07/19

Gold weaker after ECB’s signals QE plans

Gold 2607

The precious metal was seen trading weaker on Thursday. This came after the ECB announced plans to lower interest rates and perhaps even restart its QE program. The dovish comments from the ECB were widely anticipated.

Gold prices have been consolidating into an ascending triangle pattern right after the strong weekly consecutive gains. The gains in the precious metal saw prices likely to reverse losses to retest the resistance area of 1440.

However, given the declines currently, there is scope for gold prices to extend declines in the short term. But unless the resistance area of 1440 is not tested, the declines could be limited to 1400 levels in the near term. We expect gold prices to eventually rise back to the 1440 level in the medium term ahead of further declines.

Crude oil attempts to pare losses

WTI 2607

Oil prices were seen attempting to pare losses on Thursday. Price action indicates however that the upside could be limited for the moment. With resistance firmly established near the highs of 57.50, the resistance level here is likely to hold off the gains in the near term.

The rebound in oil prices came as initially the API and the EIA reported a larger than expected drawdown in crude oil inventories. However, oil prices brushed aside the data and continued to trend lower. Part of this decline is attributed to the strong U.S. dollar.

In the near term, oil prices could be seen extending declines down to the 54.42 levels. Establishing support at this minor price level could see oil prices potentially moving in a sideways range. A break down below the 54.42 could signal further declines that will pull oil prices down to test the elusive 50.00 handle.

EURUSD drops on dovish ECB

EURUSD 2607

The common currency was seen trading mixed although given the fact that price is near support, the declines could be overdone in the short term. The EURUSD currency pair is still seen above the support area of 1.1129.

If support is established here, then we expect the common currency to possible push higher in the near term. The upside resistance level is seen at the 1.1200 level. A rebound to this level could potentially indicate the right shoulder formation of the larger head and shoulders pattern.

A breakdown from the neckline support at 1.1129 – 1.1110 could signal further losses that could possibly push the EURUSD down to test parity. But for the moment, the declines are limited in scope. Next week’s Fed meeting will be the next big ticket item.

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