XAGUSD, ambiguous dynamics after a sharp decline yesterday
The asset is under pressure due to the strengthening of the US currency in anticipation of the next speech by US Federal Reserve Chairman Jerome Powell, whose rhetoric is likely to favor further tightening monetary policy during the July meeting. As before, the markets do not analyze the very fact of the rate increase but the pace of this growth and the evaluation of the effectiveness of the steps taken earlier. Meanwhile, the Bank for International Settlements (BIS) has called for a more “hawkish” stance from leading financial regulators, despite the risks of a slowdown in macroeconomic indicators: if measures are not taken promptly, this could lead to general stagflation. However, the current rate adjustment in the world’s major economies is 1% to 6% below the historical range and is similar to what was recorded in the 1970s, according to a document published by the BIS.
The trading instrument is slightly supported by a corrective decline in the yield of 10-year US Treasury bonds, which on Wednesday morning corrected from 3.207% to 3.172%, as well as inflationary risks in the world’s leading economies: for example, in May, price growth in the US accelerated to 8.6%, which is the highest since 1981. Another positive factor for silver is the increase in industrial activity in China, which is gradually increasing the volume of imports and is recovering from the downtime of factories closed for quarantine. Yesterday, Chinese media noted that no new COVID-19 cases were reported in Beijing and Shanghai on Monday for the first time since February 19.
On the daily chart, Bollinger Bands are steadily declining: the price range is expanding from below, letting the “bears” renew local lows. The MACD indicator is falling, keeping a relatively strong sell signal (the histogram is below the signal line). Stochastic, having made an unsuccessful attempt to reverse upwards at the end of last week, returned to the decline again, indicating that the instrument may become oversold in the ultra-short term.
Resistance levels: 20.86, 21.21, 21.40, 21.69 | Support levels: 20.58, 20.39, 20, 19.5
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XAUUSD - Fibonacci analysis
D1
On the daily chart, the price reversed at 1868.00 (correction of 23.6%) and corrected downwards as part of a descending fan. Currently, the quotes are preparing to test the level of 1812.00, fixing below which will give the prospect of further decline up to the level of 1726.50 (extension of 61.8%). If the price consolidates above the center line of Bollinger Bands (1838.00), the growth may resume to the levels of 1868.00 (correction 23.6%) and 1902.50 (correction 38.2%). However, this variant of the movement is seen as less preferable, since the indicators point to the continuation of the downtrend: Bollinger Bands and Stochastic are reversing downwards, and MACD is stable in the negative zone.
W1
On the weekly chart, the price dropped to 1811.00 (correction of 61.8%), which is currently being tested. Consolidating the price below it will give the prospect of further decline to the area of 1782.00 (opposite fan line 38.2%). Otherwise, growth will resume to the levels of 1844.50 (correction of 50.0%), 1878.00 (correction of 38.2%). Technical indicators don’t provide a clear signal: Bollinger Bands are directed horizontally, MACD is near the zero line and its volumes are insignificant, and Stochastic has reversed downwards.
In the near future, it seems possible that the price will continue to decline with targets at the levels of 1782.00 (opposite fan line 38.2%, W1) and 1726.00 (extension of 61.8%, D1). If the quotes consolidate above 1838.00 (the center line of Bollinger Bands), growth will be able to resume to 1868.00 (correction of 23.6%, D1) and 1878.00 (correction of 38.2%, W1).
Resistance levels: 1838, 1868, 1878 | Support levels: 1811, 1782, 1726
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XAU USD - The pair may grow.
If the assumption is correct, the XAU/USD pair will grow to the levels of 2000–2070.42. In this scenario, critical stop loss level is 1784.69.
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Gold price shows negative trades now, reinforcing the expectations of continuing the bearish trend in the upcoming sessions, reminding you that we are waiting to visit 1780.25 followed by 1750 levels as next main stations, while holding below 1818 represents the first condition to continue the suggested decline.
The expected trading range for today is between 1780 support and 1825 resistance.
The expected trend for today: Bearish
Gold is ready for a local reversal
There are only three most liquid equivalent assets in the global economy: the US dollar, oil, and gold. When one of them rises sharply, the other two always fall, which is what is happening now: the oil price has fallen below 100, and gold quotes are approaching 1700. This situation cannot last long: the issue of the US currency causes an increase in inflation, which has already exceeded 9.0%, which means that the purchasing power of the population has decreased again, and this will lead to a drop in demand for the dollar, which will provoke an increase in oil and gold.
On the daily chart of the asset, the price is moving within the global downward channel. Technical indicators maintain a sell signal, not excluding a slight correction: fast EMAs on the Alligator indicator are below the signal line, and the AO oscillator histogram has formed the first rising bar in the sell zone.
Resistance levels: 1745, 1786 | Support levels: 1707, 1685
Trust Score 4.9
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Gold - The pair is in a correction, a fall is possible.
On the daily chart, a downward correction develops as the fourth wave of the higher level (4), within which the wave C of (4) forms. Now, the fifth wave v of C is developing, within which the third wave of the lower level (iii) of v of C is ending the formation.
If the assumption is correct, after the end of the correctional wave (iv) of v of C, the XAUUSD pair will fall to the levels of 1681.1–1621.9. In this scenario, critical stop loss level is 1811.8.
Trust Score 4.9
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