XAUUSD Offering Plenty of Trading Opportunities
Gold has been wild to trade so far in October! We have been sticking to key S/R levels 1750, 1765, 1775, 1782, 1793 and 1800 for trading opportunities. This coming week is light on news so let's look at the fundamentals for gold to see if we can work out price action.
1. Inflation is clearly not transitory. CPI prints are as high as they've been since the 1970s - XAU positive
2. The global economic and employment situation is improving - XAU negative
3. FED did not announce any tapering schedule yet - XAU positive
4. The biggest component of DXY is EURO and we need to see EU below 1.15 for a new bull run...we need a reason for this - XAU positive
5. XAU is a safe haven instrument, when the market is not sure about the indices its is normal that XAU gets some demand so there is no reason for below 1750 and above 1812 - XAU negative
Looking at the run from 1760 to 1800 last week, price did not break the trendline so technically the move down from there is quite understandable. Price simply touched the trendline and retraced.
So what next? We are looking for price to settle above 1765 for long trades. Ideally when the market opens, it will complete the retracement around 1760 then a new bull leg can take over back to the upper trendline. We will be looking for 1780 and 1790 as long targets before reassessing the price action. Remember there is a strong trendline resistance over 1790 and many strong resistance levels above that so we need a good reason to stay long there.
If price cannot settle over 1765 or extends the fall back to 1750. We think a bigger fall is in the works. In this case, we would look for a bounce from 1750s back to 1775-1780 before taking the short back to 1747-1745. A closing here or a breaking of the lower trendline could mean price will test the September lows and potentially lower.
In this case we would look for targets around 1720-1715.
Good luck and good hunting!
1. Inflation is clearly not transitory. CPI prints are as high as they've been since the 1970s - XAU positive
2. The global economic and employment situation is improving - XAU negative
3. FED did not announce any tapering schedule yet - XAU positive
4. The biggest component of DXY is EURO and we need to see EU below 1.15 for a new bull run...we need a reason for this - XAU positive
5. XAU is a safe haven instrument, when the market is not sure about the indices its is normal that XAU gets some demand so there is no reason for below 1750 and above 1812 - XAU negative
Looking at the run from 1760 to 1800 last week, price did not break the trendline so technically the move down from there is quite understandable. Price simply touched the trendline and retraced.
So what next? We are looking for price to settle above 1765 for long trades. Ideally when the market opens, it will complete the retracement around 1760 then a new bull leg can take over back to the upper trendline. We will be looking for 1780 and 1790 as long targets before reassessing the price action. Remember there is a strong trendline resistance over 1790 and many strong resistance levels above that so we need a good reason to stay long there.
If price cannot settle over 1765 or extends the fall back to 1750. We think a bigger fall is in the works. In this case, we would look for a bounce from 1750s back to 1775-1780 before taking the short back to 1747-1745. A closing here or a breaking of the lower trendline could mean price will test the September lows and potentially lower.
In this case we would look for targets around 1720-1715.
Good luck and good hunting!