Constant weakness on DX is adding Buying pressure on Gold

FX:XAUUSD   Gold Spot / U.S. Dollar
Gold's general commentary: The dominant pattern on Gold is a clear Ascending Channel regarding Hourly 1 chart. However since the October #13, the Hourly 4 chart’s RSI is Descending, being on Higher High’s, which is on a Bearish divergence with the actual Spot Price-action which is within Lower High’s and Higher Low’s for more than #14 sessions. I have seen the exact same sequence on July #8 - #16 fractal , where Gold was within Rectangle , engaged the aggressive decline, then started the recovery with more than #100 points. The RSI was then Descending, while the Price-action made #3 Lower Lows on the bottom trendline of the Descending Channel , which Technically (if Gold repeat it’s cycle) could engage the recovery, get rejected and hit #1,775.80 pressure point, which should represent final (#3rd) failed attempt to break the Resistance cluster. That suggests that Gold may be pricing a Top here (temporary or not) and using September #22 rejection point.

Technical analysis: Despite the weakness on DX , Gold is extending the uptrend / Buying pressure is evident, but still Gold is showcasing the strong underlying Bearish trend (Selling #2 current local High's with strong Bearish reaction / impulse). What keeps Gold ranged aswell is the Usd-Jpy pair, Trading near Support zone on Neutral candles (within Neutral Rectangle ). It is worth noting that MA's got mixed on Hourly 4 chart, issuing the Golden Cross (potential Bullish formation), but on the other side, statistically, only #3 out of last #7 Golden Crosses were initially followed by the market, so I give no strong importance to current Cross fractal . As discussed, I see many similarities regarding current Price-action (with High Volatility belt throughout July), strong side Swings, as I am only expecting Gold to Buy the every dip under these conditions. More specifically with #1,792.80 as the Hourly 4 Resistance (and with the Hourly 1 #1,778.80 well Supporting, showing Highj durability) if Resistance gets invalidated (and DX continues Trading on Weekly Low's), I am expecting an aggressive Gap fill towards #1,800.80 barrier within #1 - #2 sessions. The Daily chart is slowly turning Neutral and can support the uptrend (in my reports I have mentioned that the Daily chart confirmation is what Buyers are waiting for). This #1 - #2 session horizon coincides with release of the U.S. Fundamental events, so all the parameters support a speculative Short-term uptrend on Gold amplified by constant Low's on DX . Keep in mind that Gold is surely Bearish on the Medium-term, what keeps it ranged is current events on the correlating assets ( DX especially). I am expecting rally once again (as DX cannot Trade only in one direction), which can postpone ultimate Gold's recovery, aiming the last High of this cycle. As soon as DX recovers on Weekly chart, it is a sign that Gold should be Sold on Medium-term towards #1,700.80, and #1,678.80 in extension.

Fundamental analysis: Gold continues to be the product of High speculation on the Futures prices as the gap between Spot and GC is not evident anymore. Current sentiment shows the continued High degree of Volatility and how unstable the market (along with most asset classes) has become. Technically the Hourly 4 chart's Bollinger band zone is preserved still and has Lower High to give (#1,792.80) with Gold now having #3 Higher High attempts (sequence similar to February #24, March #9 and August #17). The Hourly 4 chart is fully Overbought (but still an healthy Ascending Channel ) as the #RSI is on the same level as it was on the March #9 Top, pointing on new decline. I can call yesterday’s session High a local Top and if Price-action gets rejected, expect a pullback first towards the Hourly 1 Support of #1,775.80 then depending on DX numbers, I’ll base my strategy.

My position: As long as DX is showing Bearish values, Gold may continue to rise along with Usd-Jpy (the #2 are normally on a negative correlation) but on a Lower pace. Following a Bearish Medium-term (steady Low rates in the foreseeable future) outlook from the Fed but counterbalanced if the DX keeps losing, Gold is attempting to find balance between the two factors and has found itself consolidating again around the Hourly 4 chart's Resistance zone , naturally on a Neutral setting. This is similar to the September #9 - #14 consolidation on the Hourly 4 chart's #MA50 with the rough neckline then representing #1,937 - #1,951 (excluding the abnormal event on the #10 September). I am on sidelines with main aim to protect my capital, unless one of (discussed above) benchmarks break.

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Professional market analyst and Financial consultant with over #8 Years experience. I specialize Gold market using specific proven mathematical models. I provide market insights and Professional guidance.