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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 31/05/19

Gold retraces losses and remains volatile

Gold 3105

Gold prices were seen recovering sharply on the day on Thursday as price reversed the losses from earlier in the week. The reversal in gold prices comes amid heightened volatility in the global markets. This also put at risk the bias which remains flat for the moment.

Following the brief ranging price action between the 1285 and 1270 level, gold prices broke out to the upside, rising above the 1285 level to test the highs at 1290. A daily close above this level could potentially invalidate the bearish bias. The evolving head and shoulders pattern could be invalidated leading to a possible reversal in gold prices.

Therefore, it is ideal to watch for the upside in gold. Price action is on track to post a second week of gains near the current level. This comes as price remain caught within the range rather sharply.

Oil drops over 4% as inventory builds up

WTI 3105

The weekly crude oil inventory report from the Energy Information Administration showed a less than expected result. Amid results for a drawdown of 1 million barrels, oil inventory reported a modest build up of nearly 200k barrels for last week.

This led to a sudden decline in WTI crude oil prices as it crashed past the 57.50 level of support on Thursday. The strong decline below this level of support suggests further downside in store. In the near term, crude oil prices could recover back to the 57.50 handle where resistance is likely to be formed.

If there a successful reversal near the 57.50 level, oil prices could be seen breaking down lower. This opens the downside for oil prices to test the $50.00 handle in the medium term, aligning the declines to the expected correction to the downside.

Euro sits near two-year low

EURUSD 3105

The common currency was seen trading flat on the day but close to a two-year low. The declines came as the euro failed to capitalize on somewhat mixed data from the United States. The revised GDP estimates for the first quarter stood at 3.1% against initial estimates of 3.2%.

But following a flat price action, a bullish follow through today could lead to the euro potentially turning bullish. If this is the case, then we expect the EURUSD to test the 1.1200 level where resistance could be established.

To the downside, a break down below mid-May lows could extend declines further putting the EURUSD on track to test fresh yearly lows.

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