Hello traders,
**Gold**
This week, a series of important economic data will be released, particularly the U.S. non-farm payroll data on Friday. If the employment data is very weak, leading to a significant increase in market expectations for interest rate cuts, this could drive up the prices of all assets.
Particular attention should be paid to the exchange rate of the dollar against the yen. In the week ending February 25, speculative funds heavily sold off bullish positions on the dollar, causing the dollar index to drop by 0.7%. Specifically, bullish positions on the dollar decreased by one-third, falling to $15.4 billion. Meanwhile, bullish positions on the yen surged by 58%, reaching a record 96,000 contracts. This indicates that the market has become more sensitive to fluctuations in the dollar/yen exchange rate.
This increased sensitivity means that market participants are more focused on the volatility of the dollar/yen exchange rate, and any adverse economic data or changes in market sentiment could lead to dramatic fluctuations in the exchange rate. There is a need for heightened vigilance as the dollar/yen exchange rate could fall back into a risk zone, potentially triggering risks related to the unwinding of arbitrage trades. The unwinding of arbitrage trades could lead to further declines in the exchange rate, creating a vicious cycle.
In the current technical and futures market environment, the trend of gold shows a clear bearish tendency, but the market situation is complex and needs to be analyzed from multiple perspectives.
1. **Technical Analysis**
- **Bearish Trend**: From a technical perspective, gold is in a clear bearish trend. This may mean that prices could continue to be under pressure in the short term, especially when market sentiment leans towards risk aversion or lower risk appetite.
- **Key Support Level**: If the gold price breaks below the key support level, near last week's new low of around 2833, it may further accelerate the decline. Conversely, if it can hold above the support level, it may provide a basis for a price rebound and result in a range-bound market.
2. **Futures Market Dynamics**
- **Net Selling Phenomenon**: Gold has experienced net selling, indicating that market participants are reducing their long positions in gold. This reflects a bearish sentiment in the short term.
- **Changes in Short Positions**: Traditional large short swap traders have significantly reduced their net short positions in gold over the past three weeks, cutting 37,100 contracts (approximately 3.7 million ounces, equivalent to $10.7 billion). This indicates that short selling pressure is weakening, which may provide some support for a future price rebound. Therefore, before the non-farm data is released this Friday, trading gold can be approached with a range-bound strategy.
3. **ETF Market Dynamics**
- **Capital Inflow**: Despite the net selling in the futures market, the gold ETF
GLD recorded a capital inflow of $4 billion last week, the largest single-week inflow in history. This indicates that the demand for physical gold investment remains strong, possibly related to risk aversion or long-term investment strategies.
- **Investment Demand**: The inflow of funds into ETFs may provide some support for gold prices, especially in a bearish sentiment in the futures market.
On the weekly chart, gold formed a large bearish candlestick last week, creating a weekly bearish engulfing reversal pattern.
On the daily chart, after four consecutive trading days of decline, gold needs a period of consolidation to determine whether it will continue to move downward.
Considering that gold is trading below the EMA, it's advisable to follow the trend. After consolidation, the probability of shorts covering and longs exiting will be higher, increasing the chances of further declines in gold!
This week's trading plan is to follow the trend below the EMA on the weekly and daily charts and look for downward opportunities on the 4-hour chart to continue shorting gold.
GOOD LUCK!
LESS IS MORE!
**Gold**
This week, a series of important economic data will be released, particularly the U.S. non-farm payroll data on Friday. If the employment data is very weak, leading to a significant increase in market expectations for interest rate cuts, this could drive up the prices of all assets.
Particular attention should be paid to the exchange rate of the dollar against the yen. In the week ending February 25, speculative funds heavily sold off bullish positions on the dollar, causing the dollar index to drop by 0.7%. Specifically, bullish positions on the dollar decreased by one-third, falling to $15.4 billion. Meanwhile, bullish positions on the yen surged by 58%, reaching a record 96,000 contracts. This indicates that the market has become more sensitive to fluctuations in the dollar/yen exchange rate.
This increased sensitivity means that market participants are more focused on the volatility of the dollar/yen exchange rate, and any adverse economic data or changes in market sentiment could lead to dramatic fluctuations in the exchange rate. There is a need for heightened vigilance as the dollar/yen exchange rate could fall back into a risk zone, potentially triggering risks related to the unwinding of arbitrage trades. The unwinding of arbitrage trades could lead to further declines in the exchange rate, creating a vicious cycle.
In the current technical and futures market environment, the trend of gold shows a clear bearish tendency, but the market situation is complex and needs to be analyzed from multiple perspectives.
1. **Technical Analysis**
- **Bearish Trend**: From a technical perspective, gold is in a clear bearish trend. This may mean that prices could continue to be under pressure in the short term, especially when market sentiment leans towards risk aversion or lower risk appetite.
- **Key Support Level**: If the gold price breaks below the key support level, near last week's new low of around 2833, it may further accelerate the decline. Conversely, if it can hold above the support level, it may provide a basis for a price rebound and result in a range-bound market.
2. **Futures Market Dynamics**
- **Net Selling Phenomenon**: Gold has experienced net selling, indicating that market participants are reducing their long positions in gold. This reflects a bearish sentiment in the short term.
- **Changes in Short Positions**: Traditional large short swap traders have significantly reduced their net short positions in gold over the past three weeks, cutting 37,100 contracts (approximately 3.7 million ounces, equivalent to $10.7 billion). This indicates that short selling pressure is weakening, which may provide some support for a future price rebound. Therefore, before the non-farm data is released this Friday, trading gold can be approached with a range-bound strategy.
3. **ETF Market Dynamics**
- **Capital Inflow**: Despite the net selling in the futures market, the gold ETF
GLD recorded a capital inflow of $4 billion last week, the largest single-week inflow in history. This indicates that the demand for physical gold investment remains strong, possibly related to risk aversion or long-term investment strategies.- **Investment Demand**: The inflow of funds into ETFs may provide some support for gold prices, especially in a bearish sentiment in the futures market.
On the weekly chart, gold formed a large bearish candlestick last week, creating a weekly bearish engulfing reversal pattern.
On the daily chart, after four consecutive trading days of decline, gold needs a period of consolidation to determine whether it will continue to move downward.
Considering that gold is trading below the EMA, it's advisable to follow the trend. After consolidation, the probability of shorts covering and longs exiting will be higher, increasing the chances of further declines in gold!
This week's trading plan is to follow the trend below the EMA on the weekly and daily charts and look for downward opportunities on the 4-hour chart to continue shorting gold.
GOOD LUCK!
LESS IS MORE!
Copy trading service：social.xm.com/s/kRqA3rRj ABC Swing trading strategy Course Consul wechat: ziyuvera
signalsofswingtrading.com
Tele: t.me/+Q5K2Z5r3BhCe1c1l
signalsofswingtrading.com
Tele: t.me/+Q5K2Z5r3BhCe1c1l
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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.
Copy trading service：social.xm.com/s/kRqA3rRj ABC Swing trading strategy Course Consul wechat: ziyuvera
signalsofswingtrading.com
Tele: t.me/+Q5K2Z5r3BhCe1c1l
signalsofswingtrading.com
Tele: t.me/+Q5K2Z5r3BhCe1c1l
Related publications
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.