Chart of the Day XAUUSD (GOLD)
XAUUSD Pivotal Projected Trendline Test
Fears surrounding COVID-19 continue to dominate. Centers for Disease Control and Prevention (CDC) officials briefed the US on how to get ready if the coronavirus outbreak worsens domestically; even as top White House economic advisor Larry Kudlow maintained that the coronavirus was contained so far in the US and that economic growth had yet to be significantly affected. Dozens of other countries have also accelerated emergency measures to curb the spread of the coronavirus, which has killed close to 2,700 in China, although the World Health Organization (WHO) says the outbreak there has been declining since 2 February.
The rapid spread of the virus beyond China has heightened fears over its impact on the global economy. US equities continued to plunge on Tuesday, with the Dow Jones Industrial Average losing 879.44 points (-3.15%) to end at 27,081.36. The benchmark posted back-to-back losses of at least 800 points for the first time ever. The 10-year US Treasury note hit a record-low yield on Tuesday amid the flight to safety on concerns the COVID-19 epidemic would have a significant impact on global growth, coupled with soft US economic data. The US dollar weakened on Tuesday on growing expectations that the Fed would cut interest rates this year to relieve pressure on the economy caused by the COVID-19 outbreak. After reaching a three-year high of close to 100 last week, the DXY index fell to lows of 98.883 before closing around 98.968. Gold has witnessed a bout of profit taking premised on market rumours regarding various central bank sales, along with funds needing to liquidate profits in commodity markets to cover margin calls in equity markets.
From a technical & trading perspective XAUUSD continues to track the price template laid out in last years market action, the recent pause ahead of a full test of offers and stops above 1700 fits the pattern (as highlighted in the chart), bulls can expect some near term consolidation in coming sessions before the next leg of upside will likely develop. The developing divergence on the sentiment and momentum indicators is noteworthy and just come to bare on price action as we test towards the some significant resistance sighted fro 1715/1735 its is from these lofty levels bears will likely try to make a stand, watch for daily reversal patterns to emerge here ahead of a more significant corrective phase which likely sees a move to retest 1600 as support
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 70% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!