Gold Creates This Bull Signal Ahead Of NFP
Fawad Razaqzada | May 08, 2020 07:44
Thanks to record low rates and QE, not to mention increased haven demand, gold has managed to retain most of its recent gains. And now it may have formed a key technical signal that it wants to break new 2020 highs.
Take a look at this daily chart of gold:
On Thursday, gold may have ended its recent consolidation phase as the market decided that it wants to go higher. The metal broke above the bear trend of the consolidation formation, creating in the process a large daily bullish engulfing candle.
The engulfing candle more than made up the losses from the day before, thus ending the short term bearish bias.
It is important that gold now holds above Wednesday’s high of ~$1708, which is the first key level of support now. If it doesn’t then the bulls may be in a spot of bother and would be in real trouble should gold go on to break below Thursday’s low at ~$1682.
But if gold does hold the breakout then the bulls may target the liquidity above the recent high of $1747/8 next, with the 127.2% Fibo at ~$1772 being the subsequent target.
The key risk is Friday’s US jobs report. In the event that the non-farm job losses are not as bad as indicated by the ADP (NASDAQ:ADP) and jobless claims data that we have seen in recent weeks, then that could help to support the dollar and undermine gold. But I doubt this would be the case.
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