Technical Analysis XAUOIL : 2018-05-29

IFCMarkets Technical Analysis
IFCMarkets Technical Analysis

In this review, we suggest considering the synthetic, gold instrument “Gold vs Oil”. It reflects the dynamics of the price change per barrel of WTI relative to gold. Will XAUOIL prices rise?

Such a tendency means that gold is in demand and its prices rise more than oil prices. Precious metals are advancing amid rising political risks on new US sanctions against Iran, as well as the rescheduling or even cancellation of the meeting between US President Donald Trump and North Korean leader Kim Jong-un. Earlier, it was scheduled for June 12, 2018. An additional positive for gold was the political crisis in Italy and Spain, threatening the stability of the Eurozone. The next US Fed meeting will be held on June 13. Most market participants expect another rate hike, which strongly inhibits the growth of precious metals prices. Meanwhile, the district heads of the Federal Reserve are not of a single view that the rate must be raised right now. A pause is possible in the actions of the Fed, which can support gold. Let us recall that last time, the rate was raised at the meeting held on March 31, 2018. In turn, WTI updated a 6-week low amid a possible cancellation of restrictions on the production of OPEC and independent producers. This can be announced at the next OPEC meeting on June 22. The growth in US production by 27% over the past 2 years – to 10.37 million barrels per day also contributes to the decrease of oil prices.


On the daily timeframe, XAUOIL: D1 is trying to overcome the resistance line of the falling channel. The further price increase is possible in case of an increase in global political and economic risks, as well as an increase in world oil production.

  • The Parabolic indicator gives a bullish signal.
  • The Bollinger bands have narrowed, which indicates low volatility. They are titled upward.
  • The RSI indicator is above 50, but it has not reached the overbought zone yet. No divergence.
  • The MACD indicator gives a bullish signal.

The bullish momentum may develop in case XAUOIL exceeds the last high and the upper Bollinger band at 19.8. This level may serve as an entry point. The initial stop loss may be placed below the last fractal low, the 3.5-year low and the Parabolic signal at 17.7. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level at 17.7 without reaching the order at 19.8, we recommend to close the position: the market sustains internal changes that were not taken into account.

Summary of technical analysis

Position Buy
Buy stop Above 19,8
Stop loss Below 17,7

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