XAUUSD will form a 1D Golden Cross after the Fed. What's next?

Gold investors are looking forward to 2 key developments this week: The (fundamental) Fed Interest Rate Decision on Wednesday and the (technical) Golden Cross on the 1D time-frame, which may either be formed on Friday or by next Tuesday.

With the latest news from the Fed's side pointing to no change in their economic outlook over inflation, maintaining their intention of keeping the rates low, this continues to build a strong case for Gold as a counter-inflation investment.

The Golden Cross on the other hand is a technical formation that happens when the MA50 (blue trend-line) crosses above the MA200 (orange trend-line), shifting the sentiment from long-term bearish to long-term bullish. The last Death Cross (the opposite of the Golden Cross) on the 1D time-frame was formed on February 15 and it marked the top at the time as after a short rebound, Gold plunged -8%.

As you see, I'm approaching the long-term price action since the August Market Top (All Time High) as a symmetrical sequence. Even though the uptrend of the past 2.5 months isn't a copy-past of the August 06, 2020- March 08, 2021 down trend (how could it after all), the two are fairly similar in the sense that they seem to be respecting several Support and Resistance levels within their respective Channels.

At the moment, the price found the 1D MA200 (orange trend-line) as well as the longer-term 1W MA50 (red dotted line). On November 30, 2020, such a pull-back near the 1W MA50, reversed and delivered a strong +11% rebound. On top of that, yesterday's low was on the Symmetrical Support (1), which is a Zone that since September 23, 2020 has held on a few occasions. The chances of a rebound here are strong. However, if the Golden Cross fails to contain the price next week, there is a probability for one final leg downwards to the Symmetrical Support (2). That seems less likely though to happen as since the June 01 High was slightly below the 0.618 Fibonacci (counting from the August Top), the 0.382 Fibonacci seems like the most likely Support level.

In any case if an investor scales their buys correctly on those two zones, the long-term return appears to be excellent as by the end of the year based on this pattern, Gold should make new ATH.



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