Analys från DailyFX
Gold Prices Recoil Shy of $1,296: Double Top Breakout in Store?
Talking Points:
– Gold Prices have put in an aggressive bullish movement, but have yet been unable to take out the double-top formation around $1,296.
– Current price action is finding support off a key Fibonacci level, but Gold prices have been moving violently around the recent theme of risk aversion.
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Gold prices have been on quite the run over the past month. After bottoming out below $1,205 in July, buyers have returned with gusto to drive price action towards the double-top formation at $1,296. The move appeared to start as another gust of weakness was developing in the U.S. Dollar in the early part of the month; but more recently, an uptick in geopolitical tension drove an extreme bullish move in Gold prices as the yellow metal made a near-parabolic ascent towards that prior point of resistance (this is outlined in green on the below chart).
Gold Four-Hour: Bulls Return to Drive Prices Towards Double-Top Resistance at $1,296
Chart prepared by James Stanley
This near-term move of strength has also seen the longer-term descending channel taken-out, as Gold prices found support on the projection of the trend-line that exists from the July-November, 2016 highs. While price action peeked out of this channel previously in June, support didn’t show-up on the daily chart. Instead, prices ran into April resistance, at which point sellers took over. But the driver on that move appeared to be rather clear, as this took place right around the time of James Comey’s testimony in front of Congress.
Gold Daily: Support at Prior Resistance (Descending Trend-Line Projection)
Chart prepared by James Stanley
The driver behind the most recent incline in Gold prices appears to be jitters around the U.S. stand-off with North Korea over the DRRK’s nuclear ambitions. A tweet was sent last Tuesday around Noon Eastern Time in which U.S. President Donald Trump spoke on the matter, saying that nuclear threats from North Korea would be met with ‘fire fury, and frankly, power the likes of which the world has never seen’.
Gold prices promptly moved-higher after that tweet, and continued to run for the rest of the week. As we opened this week, a bit of calm showed across global markets and Gold prices retraced down to a key level of support. At $1,278.76 we have the 61.8% retracement of the July-December 2016 major move; and this level is helping to set near-term support so far on this early week.
Gold Prices Bid After Trump’s ‘Fire and Fury’ Tweet: Current Support at 61.8% Fib
Chart prepared by James Stanley
The challenge with the Gold trade at the moment is that this appears to be firmly-aligned with the global risk trade. As risk aversion shows with a bit more prominence, Gold prices have caught a significant bid to jump-higher on the back of that theme. This can be a difficult time looking for trend-continuation setups, as the move on both sides of Gold can be rather sharp.
For traders looking at taking on exposure in Gold, a breakout of the $1,296 double-top formation can open the door to bullish continuation strategies. A series of potential resistance levels residing above current prices can be used to allocate profit targets. The Fibonacci level at $1,315.60 could be particularly attractive to such an approach, as this is the 76.4% retracement from the same set of levels that helped to set current support.
Gold Daily: Potential Resistance Levels Above $1,296 Double-Top Applied
Chart prepared by James Stanley
— Written by James Stanley, Strategist for DailyFX.com
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What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
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EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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