Has Gold Triggered Price Action With Deeper Retracement?
FxGrow | Oct 27, 2017 12:11
After seven consolidation sessions where gold was fluctuating between 80+ and 70s area, finally gold has give a clear sign for a deeper dips and washes 6th Oct daily bullish grabber candle at 1260 low. Yesterday, gold extended the correction phase clocking 1282.60 high then started deprecation gradually, but after ECB's dovish scenario and as the euro was aggressively plunging, the Dollar Index (DXY) was strengthening hitting a three month high at 94.60, gold submitted closed one hour below 70, then extended losses at 1265.80 low.
Today, gold traded narrow inside yesterday's candle with 1264.80 low, then started another correction phase till 1269, currently trading 1268 Intraday.
Technically, yesterday's bearish candle is to be considered engulfing for 6th Oct bullish grabber and erased all the scenarios for potential upward trend reversal, and at this moment, market should expect some upward corrections between 72 and 78, but the 1250-45 zone still persists. Add to that, the 10-year yield bonds were also rising with 2.47 high today which adds more pressure on gold along with strong greenback.
Fundamentally, market is awaiting U.S GDP which will be released today at 12:30 PM GMT, and market stands at two possible scenarios. In both cases, whether data is negative or positive and taking into consideration that DXY levels at H1 and H4 are oversold at RSI, gold and in react to the data, could rally shortly around 72 and 76 levels, but eventually the 1250+/- will be achieved (Technically). The other scenario is that gold could start falling reaching 1260-58 support area and start upward correction retracement also at 70s area, and again, the 1250+/- should be achieved (technically).
Last but not least, and to add an unpleasant scenario that could reverse the technical overview is any real political tension between NK and USA with serious actions, in this case we gold will shift as safe haven substitute and will start rising gradually depending on the level or pace of the events.
XAUUSD Technical Summary
Current price: 1268
Closing price: 1267.60
Trend: Down
Target price: none at this moment
Trend Reversal price: 1291.40
Resistance levels: 1270-72, 1282
Support levels: 1262.50 , 1260, 1250+/-
Comment: The market is bearish and suggesting a bear extension to test around the last swing low in the 1264-1261 levels. A close under 1260 opens up potential near 1250. Any corrections trapped within yesterday's outside bear range should retain bear forces and bear flag. A pop over 1282.30 is needed to stop pressing bear forces, however, only a close above 1291.40 will shit bear to bull trend.
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