Technical analysis update: Gold (31st January 2022)
Gold took a beating after the last FOMC. It plunged below three important support levels: 1850 USD, 1835 USD and 1800 USD; additionally, this drop invalidated the recent bullish breakout above 1835 USD. The FED's commitment to raise interest rates multiple times in 2022 poses a substantial threat to gold price. The FED's aggressive stance towards raising interest rates forces us to reassess our views. We are currently inclined towards a bearish scenario as it is being signaled by bearish technical indicators and fundamental outlook for gold. We will closely watch 1775 USD and 1750 USD price levels. Previously, the 1750 USD support level acted as the lower bound of the neutral zone. If this price level is penetrated to the downside then it tremendously increases bearish odds for gold.
Illustration 1.01
Picture above shows the daily chart of XAUUSD. It also shows the neutral zone that spans between 1750 USD and 1835 USD. Gold has been trading within this zone for most of the time for the past 6 months.
Technical analysis - daily time frame
RSI is bearish with signs of flattening. MACD points into the downside, however, it remains within the bullish zone. If it manages to cross below 0 then it will further bolster the bearish case for gold. Stochastic is bearish as well. Additionally, DM+ and DM- show a bearish trend is present. ADX increases which suggests that this trend strengthens.
Technical analysis - weekly time frame
RSI is neutral. MACD undergoes reversal just slightly above 0 points. Stochastic is bearish. DM+ and DM- are bearish too. ADX declines which signals a trend of higher degree remains neutral.
Support and resistance
Short-term resistance lies at 1835 USD. Immediate resistance lies at 1800 USD. Closest support sits at 1775 USD. Other support which has great importance lies at 1750 USD.
Please feel free to express your own ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor. Your own due diligence is highly advised before entering trade.
Illustration 1.01
Technical analysis - daily time frame
RSI is bearish with signs of flattening. MACD points into the downside, however, it remains within the bullish zone. If it manages to cross below 0 then it will further bolster the bearish case for gold. Stochastic is bearish as well. Additionally, DM+ and DM- show a bearish trend is present. ADX increases which suggests that this trend strengthens.
Technical analysis - weekly time frame
RSI is neutral. MACD undergoes reversal just slightly above 0 points. Stochastic is bearish. DM+ and DM- are bearish too. ADX declines which signals a trend of higher degree remains neutral.
Support and resistance
Short-term resistance lies at 1835 USD. Immediate resistance lies at 1800 USD. Closest support sits at 1775 USD. Other support which has great importance lies at 1750 USD.
Please feel free to express your own ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor. Your own due diligence is highly advised before entering trade.
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