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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 31/01/20

Gold prices breakout off resistance


The precious metal is attempting to make modest gains after breaking out above the resistance level of 1571.50. However, the momentum is looking weak at the moment which could see some downside risks building up. So far, the economic landscape remains robust.

The main outlier comes from the fact that investors are cautious on the impact of the Coronavirus. So far, investors are seen merely reacting to the news as the number of impacted people by the virus is spreading at a rapid pace. As a result, we could see the fundamentals supporting gold prices in the near term.

For the moment, the upside target is towards the 1600 handle. But only a breakout above this level is needed to confirm further gains. Given the lack of momentum, there is a strong chance that gold prices could decline. But this can be confirmed only on a close below the 1571.50 level.

Crude oil prices decline

WTI 3101

Crude Oil prices continue their descent as the weekly inventory report saw a build up. Data from the Energy Information Administration (EIA) reported a build up of 3.5 million barrels for the week ending January 24. Oil prices remain weak amid concerns of a slowdown in the global economy on account of the Coronavirus.

Price action in the commodity indicates weakness. The modest rebound failed to hold, pushing oil prices back to the 52.00 level. A firm retest of this support will likely see a possible consolidation taking place. If oil prices slip below this level, then we expect further declines in store.

In the near term, given the confluence of the trend line and the horizontal support, there is a strong chance that oil prices will stabilize. But the rebound level remains mixed for now. Price is likely to retest the 54.00 level where it failed previously. Only a breakout above this level will signal further gains.

Euro rebounding after solid declines


The euro currency is taking a breather, posting a modest session gain for the first time since last Thursday. The rebound in the euro currency comes after the US dollar is seen pulling back. The month end flows is also expected to see some volatility that could push the USD lower into the monthly close.

For now, the rebound in the EURUSD coincides with the support level of 1.1000 region. This indicates that the minor support is turning stronger. If the rebound can be maintained, then the EURUSD will be targeting the upside in the short term. But this is most likely to be a short term correction than a change int rend.

We expect the EURUSD to remain range bound within 1.1050 and 1.1000 levels. The bias remains mixed for the moment. Even the long term trend remains flat amid a wider sideways range that the currency pair has settled into.

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