Summary:
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Oil is trading above a key support at $51
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A reversal pattern can be spotted at USDJPY
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In spite of bearish head and shoulders pattern, gold bounces off the lower limit of Overbalance structure
Oil WTI
Let’s start today analysis from oil WTI. After the enormous gap that we could observe in the aftermath of the attack on Saudi refineries, the oil price began to fall. The gap was closed quickly, but falls continued and reached a key support level of $51. Investors are now focusing on trade negotiations between the world's two largest economies. The aforementioned $51 handle has been tested a few times already therefore a chance of downward breakout increases. In case such a break is delivered, the way towards the $47.2 handle, where the 127.2% Fibonacci retracement and the lower limit of the downward channel can be found, would be left open.
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Oil WTI, D1 interval. Source: xStation5
USDJPY
Looking at the D1 interval on the USDJPY currency pair, one can see the trend reversal pattern - the inverse head and shoulders pattern is building up. However, the bullish signal would not be generated until the price breaks above the neckline. It should also be noted that the resistance resulting from the downward sequence can be found slightly higher at 109.15. Only breaking above it could lead to a trend reversal. However, as buyers are fiercely defending the 107.00 handle this week, the move towards violet line could be on the cards. On the other hand, if the price returns below this support, declines could deepen. In such a scenario, recent lows at 105.00 could be in play.
USDJPY, D1 interval. Source: xStation5
GOLD
A head and shoulders pattern could be spotted on the gold char recently. In spite of a break below the neckline, price failed to smash through the lower limit of the Overbalance structure and recovery started. According to the Overbalance methodology, continuation of an upward move is the base case scenario for now. Upward movement could accelerate further once the price breaks above the trendline marked with violet colour. Following such a break, the price may storm to new highs. Key support can be found at $1475 and a break lower could see declines deepen. The next key level in line can be found at 38.2% Fibonacci retracement of the latest upward wave.
Gold, D1 interval. Source: xStation5
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