Potential Gold Play Based on Confluence Factors
Updated
Decided to publish my short term prediction on gold based on analysis of several currency pairs and convergence areas in the XAUUSD chart.
In recent sessions we have seen significant deceleration in the current gold uptrend, including a break in the bottom of the channel that extends back to late December 2016. This, coupled with the current overbought state of gold -would logically predict a healthy pullback across the 50ema in coming sessions.
However, i predict that this pullback will be short-lived, as various currency pairs against USD require a small amount of continuation upward in order to test their key resistance levels at identical times. I will list a few below.
One such pair is EURUSD which recently broke the bottom of its trend line that dates back to 1985. In such, the Euro needs to briefly retest its trend line in the area of 1.09.
Moreover USDCHF requires a small amount of further retracing in order to test both it's 0.5 fib level and the key support area of 0.995.
In addition to this DXY also requires a small amount of retrace to properly test the key level of 100.00 before continuing on it's uptrend.
These are not the only currency pairs that reflect this.
Seeing as we expect continuation of the short term downtrend in USD against several other currency pairs in coming weeks, we can expect a short-term rise in XAUUSD. Low and behold, this price movement would send XAUUSD right up to test the area of massive convergence at the 1228 level. At this spot we have a meeting of the 200ema, the top of it's current downtrend, and a relevant resistance level dating back over two years.
Given the current uptrend in USD on a broad scale, i would assert that XAUUSD would fail to break through this convergence area and head back down as USD proceeds to head higher.
In recent sessions we have seen significant deceleration in the current gold uptrend, including a break in the bottom of the channel that extends back to late December 2016. This, coupled with the current overbought state of gold -would logically predict a healthy pullback across the 50ema in coming sessions.
However, i predict that this pullback will be short-lived, as various currency pairs against USD require a small amount of continuation upward in order to test their key resistance levels at identical times. I will list a few below.
One such pair is EURUSD which recently broke the bottom of its trend line that dates back to 1985. In such, the Euro needs to briefly retest its trend line in the area of 1.09.
Moreover USDCHF requires a small amount of further retracing in order to test both it's 0.5 fib level and the key support area of 0.995.
In addition to this DXY also requires a small amount of retrace to properly test the key level of 100.00 before continuing on it's uptrend.
These are not the only currency pairs that reflect this.
Seeing as we expect continuation of the short term downtrend in USD against several other currency pairs in coming weeks, we can expect a short-term rise in XAUUSD. Low and behold, this price movement would send XAUUSD right up to test the area of massive convergence at the 1228 level. At this spot we have a meeting of the 200ema, the top of it's current downtrend, and a relevant resistance level dating back over two years.
Given the current uptrend in USD on a broad scale, i would assert that XAUUSD would fail to break through this convergence area and head back down as USD proceeds to head higher.
Note
I have since changed my opinion on this trade to short gold, as the currency pairs i was watching have all hit their key areas and began to turn. USD looks to make a move higher and so i expect XAUUSD to return to it's floor level.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.