In today’sMarket Outlook, let’s take a look at Forex trading on Gold, XAUUSD, Silver, XAGUSD, EURGBP, WTI, and Brent Crude Oil.
The current situation in price action on crude is a great lesson in using fundamental analysis and technical analysis in combination.
Anyone who watches my videos knows that I put fundamental analysis first, over technical analysis, so let’s take a look.
On the fundamental analysis side of the price of crude oil, the war in Iran is a serious threat to pricing in crude and, despite what we hear out of Washington, there really is no route to peace right now.
To put that simply, the Strait of Hormuz is still blocked, hindering the supply of crude to the world.
Just as importantly, most major economies have large reserves of oil, but this will not last forever.
When they do run out, in a month, two months, three, prices will spike.
The US oil fields and reserves have been supplementing the shortage in Middle East oil, but export capacity is now limited.
To use a couple of famous metaphors regarding the Iran war, “Down the Rabbit Hole”, where you enter a fantasy world where you have no control, and “The Hotel California”, where “you can check out any time you want, but you can never leave.”
These are not pleasant situations, but here we are in an unnecessary war with no resolution in sight.
Without spouting more doom and gloom, this does not bode well for the price of WTI and Brent Crude Oil.
On the technical side, we see falling wedges, bullish patterns, on both WTI and Brent.
In the very short term, we see bearish signals with price action at the upper trend line and the stochastic oscillator overbought and turning over.
Speaking of falling wedges, we see another on EURGBP and, again, short-term bearish signals with the stochastic oscillator overbought and thinking about turning down.
If we look at other EUR pairs like EURUSD, we see EUR strength following last Friday’s Non-Farm Payrolls.
We see almost the same price strength in GBP, so what will be the differentiator?
The ECB will be announcing its interest rate decision today, and the forecast is for an increase.
Is this forecast built into the price? Let’s see.
The strength of USD has helped drive price action on both gold and silver to break support on these descending triangles.
Keep an eye on the news and your technicals for a pullback, but we see the next levels of support at $4,000 and $3,900.
On Silver, we have a long way to go to get to $54.
That’s all for now.
CFDs and FX are leveraged products, and your capital may be at risk.
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