Gold Overview:
Despite important bearish technical developments in the gold market, the U.S. dollar (DX) is currently trading comfortably below the lower high's lower zone on the weekly chart, way below the former 20-year high, which is causing gold to continue its sideways/ranging trend. The rejection of the lower high's upper zone on bond yields is also stalling the downtrend on gold. However, the market closing below MA50 on gold's daily chart was the necessary medium-term selling confirmation for gold, indicating only bearish developments on all gold charts, which shifted gold from neutral to bearish in the short and medium-term, ignoring recent oversold conditions. Gold has initiated a much-needed technical takedown, isolated within an aggressive descending channel, with a renewed selling bias fueled by a death cross formation (last seen in Q4, 2022) on the hourly 4 chart, which hints at a multi-month bearish cycle that may be developing.
Technical Analysis:
According to my formula, the last four times gold touched the lower low's upper zone extension and movement got rejected, it resulted in a 27-point recovery. If buyers arise and a relief rally occurs after hitting the support zone of $1,827.80 - $1,833.80, $1,852.80 (former support which would turn into resistance) is the resistance to monitor, where price action could potentially reverse towards the psychological benchmark of $1,800.80. However, if gold remains heavily pressured, then I am expecting stabilization within the $1,792.80 - $1,800.80 zone. If that zone gets tested and invalidated on one try, then long-term sellers may arise and initiate a full-scale selling oscillation towards the $1,752.80 configuration (November 30 double bottom). It is natural to expect a relief pullback, but as long as the DX is not pressured by disappointing numbers, I expect smooth diagonal (DX - gold) trading fueled by critically bearish technicals on gold. Strong bid/ask volume usually reveals that a strong movement session is ahead, and if gold breaks the psychological barrier of $1,852.80, it could easily engage in a selling sequence and even more aggressive test of lower levels on gold, such as the $1,800.80 barrier. Bond yields are still consolidating instead of rising on hopes of a better macro-economic outlook, which works as a counter to gold, causing it to remain ranged still near the bottom, visible on the hourly 4 chart's configuration. This gives me the impression that gold is more tied to the DX index movements at the moment than any other correlating asset.
My Position:
I am holding my selling order engaged throughout yesterday's session with $1,861.80 as a key entry point. I am expecting greater numbers than the forecast on today's CPI data, where my statistics point that gold will react much more strongly on higher than expected numbers, with less or no impact at all to numbers smaller than forecasted. In both cases, I am expecting a sequence test of $1,827.80 and the benchmark of $1,800.80 in extension, regardless of the CPI outcome sooner or later.
Syed Abdullah Shah
Despite important bearish technical developments in the gold market, the U.S. dollar (DX) is currently trading comfortably below the lower high's lower zone on the weekly chart, way below the former 20-year high, which is causing gold to continue its sideways/ranging trend. The rejection of the lower high's upper zone on bond yields is also stalling the downtrend on gold. However, the market closing below MA50 on gold's daily chart was the necessary medium-term selling confirmation for gold, indicating only bearish developments on all gold charts, which shifted gold from neutral to bearish in the short and medium-term, ignoring recent oversold conditions. Gold has initiated a much-needed technical takedown, isolated within an aggressive descending channel, with a renewed selling bias fueled by a death cross formation (last seen in Q4, 2022) on the hourly 4 chart, which hints at a multi-month bearish cycle that may be developing.
Technical Analysis:
According to my formula, the last four times gold touched the lower low's upper zone extension and movement got rejected, it resulted in a 27-point recovery. If buyers arise and a relief rally occurs after hitting the support zone of $1,827.80 - $1,833.80, $1,852.80 (former support which would turn into resistance) is the resistance to monitor, where price action could potentially reverse towards the psychological benchmark of $1,800.80. However, if gold remains heavily pressured, then I am expecting stabilization within the $1,792.80 - $1,800.80 zone. If that zone gets tested and invalidated on one try, then long-term sellers may arise and initiate a full-scale selling oscillation towards the $1,752.80 configuration (November 30 double bottom). It is natural to expect a relief pullback, but as long as the DX is not pressured by disappointing numbers, I expect smooth diagonal (DX - gold) trading fueled by critically bearish technicals on gold. Strong bid/ask volume usually reveals that a strong movement session is ahead, and if gold breaks the psychological barrier of $1,852.80, it could easily engage in a selling sequence and even more aggressive test of lower levels on gold, such as the $1,800.80 barrier. Bond yields are still consolidating instead of rising on hopes of a better macro-economic outlook, which works as a counter to gold, causing it to remain ranged still near the bottom, visible on the hourly 4 chart's configuration. This gives me the impression that gold is more tied to the DX index movements at the moment than any other correlating asset.
My Position:
I am holding my selling order engaged throughout yesterday's session with $1,861.80 as a key entry point. I am expecting greater numbers than the forecast on today's CPI data, where my statistics point that gold will react much more strongly on higher than expected numbers, with less or no impact at all to numbers smaller than forecasted. In both cases, I am expecting a sequence test of $1,827.80 and the benchmark of $1,800.80 in extension, regardless of the CPI outcome sooner or later.
Syed Abdullah Shah