XAU/USD tests ascending channel
Morning outlook - XAU/USD tests ascending channel
Due to release of better than expected data on import prices and industrial production the buck appreciated quite sharply against the gold and has practically reached the bottom boundary of a medium ascending channel. From daily perspective it seems that bears are going to try to drag the pair to the 61.8% Fibonacci retracement level at 1,278.96. On hourly chart such scenario is supported by the 200-hour SMA, which is now located above the current market price.
However, in order to reach that target the rate has to pass through a combined support set up by the above channel’s boundary and the weekly S1. Although the average market sentiment is 61% bullish, it is unlikely that this support will manage to turn around the exchange rate (unless some unexpected fundamental event will occur).
Due to release of better than expected data on import prices and industrial production the buck appreciated quite sharply against the gold and has practically reached the bottom boundary of a medium ascending channel. From daily perspective it seems that bears are going to try to drag the pair to the 61.8% Fibonacci retracement level at 1,278.96. On hourly chart such scenario is supported by the 200-hour SMA, which is now located above the current market price.
However, in order to reach that target the rate has to pass through a combined support set up by the above channel’s boundary and the weekly S1. Although the average market sentiment is 61% bullish, it is unlikely that this support will manage to turn around the exchange rate (unless some unexpected fundamental event will occur).
Comment:
XAU/USD returns to weekly S1 at 1,284.92
In result of a breakout from the rising wedge pattern, which matched with escalation of tensions between Spanish and Catalan governments, the exchange rate surged to the 1,290.50 level. In the process, the pair made multiple attempts to bypass the 100- and 200-hour SMAs but each time failed. As a result, it was forced to retreat back to the weekly S1 at 1,284.92.
An aggregate of technical indicators points out on further depreciation of the yellow metal via sending strong sell signals. This assumption is also supported by the fact the pair is fluctuating in a minor ascending channel, which consists of two reaction highs and only one reaction low for now. Hence, bears have an opportunity to push the price back to the 1,279.00 area, which presents location of the 61.8% Fibonacci retracement level.
In result of a breakout from the rising wedge pattern, which matched with escalation of tensions between Spanish and Catalan governments, the exchange rate surged to the 1,290.50 level. In the process, the pair made multiple attempts to bypass the 100- and 200-hour SMAs but each time failed. As a result, it was forced to retreat back to the weekly S1 at 1,284.92.
An aggregate of technical indicators points out on further depreciation of the yellow metal via sending strong sell signals. This assumption is also supported by the fact the pair is fluctuating in a minor ascending channel, which consists of two reaction highs and only one reaction low for now. Hence, bears have an opportunity to push the price back to the 1,279.00 area, which presents location of the 61.8% Fibonacci retracement level.
Despite release of negative data about the American housing market growth, the exchange rate continued to move to the bottom, in the process crossing a combination of the weekly S1 and the lower support line of senior ascending channel.
At the moment, the pair is testing the 61.8% Fibonacci retracement level at 1,278.98. It seems that pressure from the slipping 55-, 100- and 200-hour SMAs should eventually push the pair through that barrier. Afterwards, the pair would face no obstacles on its way up until the weekly S2 at 1,265.92. On the other hand, daily chart clearly indicates that an area near 1,276.34 represents location of the 100-day SMA. From this perspective, it seems that the pair is going to make a temporary rebound. In addition to that, there is a need to remember that the average sentiment remains 65% bullish.