Technical Analysis

WN04 data: Oil and Gold price

By Antreas Themistokleous

26 January 2023

This preview of weekly data looks at USOIL and XAUUSD, where both commodities seem to pause their aggressive bullish rallies following the thinning trade volumes of the Chinese New Year.

This week, the first important event on the economic calendar is ECB’s President Lagarde Speech. The European Central bank is expected to raise interest rates by 0.50% in both February & March. This could support the Euro against its pairs, especially if the hike is more aggressive than expected.

The Australian Inflation rate release on Wednesday 25th of January at 12:30 AM GMT is expected to rise by 0.2%, which could generate profits for the Aussie Dollar since it could influence a more hawkish stance for the RBA on their next interest rate hike.

As for the Bank of Canada Interest rate and press conference, also on Wednesday, January 25th at 15:00 GMT, a single hike is expected by the market which could be negative news for the loonie, whereas a double hike could support the currency, especially against the USD.

US quarterly GDP growth on Thursday 26th of January at 13:30 GMT. The consensus is for a decline of 0.6% which could create some losses for the Dollar against its pairs at least in the short term.

Oil, daily

The bullish rally on the price of oil slowed down but remains in an uptrend over the last couple of sessions. Mostly because of thinner trading volumes in Asian hours, which were diminished because of the Chinese New Year. 

Industrial activity is expected to pick up when workers return from the holiday break and the Chinese economy restarts. A weakening of the Dollar is supporting the recent boost on the price of “black gold” further pushing it to the upside.

On the technical side, the price is trading at a very strong technical resistance, consisting of the 50% daily Fibonacci retracement level and 100-day moving average around the $81,50 price area.

The Stochastic oscillator is in the overbought levels for more than a week straight and possibly indicates that a correction to the downside is a possible scenario. If this is confirmed, we might see some support around the $79 area which is a strong support area consisting of the 38.2% of the daily Fibonacci retracement level, and also a point on the bearish daily trendline.

If there is a continuation to the upside the first point of resistance would be expected around the $84 area, which is made up of the 61.8% of the Fibonacci retracement level and also the upper band of the Bollinger bands.

Gold-dollar, daily

The US Dollar Index (DXY) is in free fall hitting a 7-month low which is making gold cheaper for other currency holders. The expectation for a single hike by the FED on their next meeting on February 1st is currently at 99.8%!

This could potentially have a negative effect on the Dollar against its pairs, gold included, making gold an attractive investment for traders. The price of gold managed to remain above the psychological support of the round number of $1900 indicating that the bull sentiment is still strong.

From the technical point of view, the price flattened and moved away from the Bollinger bands, but is still trading well above all technical support levels of the moving averages and the Fibonacci levels.

The combination of the prolonged overbought levels on the Stochastic oscillator and the closing below the upper band of the Bollinger bands could indicate that there is a minor correction upcoming in the following sessions before resuming the bullish momentum.

In such a case we could possibly expect some support around $1880 which consists of the psychological support of the round number and also the 20-day moving average. 

If the bulls are proven to be strong, we might see the continuation of the current trend without the correction. In such a scenario, we might see some resistance around the $1,950, which is the upper band of the Bollinger bands and also an inside resistance area since late April 2022.

This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Antreas Themistokleous
Antreas Themistokleous

Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.

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