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A gold traders’ playbook: how gold could trade into year-endGold has been shunned by investors, but many are now questioning if the yellow metal is nearing an inflection point, for a potential turn, or should we position for further downside. With US growth likely at a peak and as good as it gets, gold longs partly flushed out, positioning paired back and sentiment as bearish as we’ve seen for years, could we be seeing a low? Tactically, I feel it is too early to see a resumption of a lasting bull trend and I am in favour of selling rallies into $1925. However, I am also incredibly enthused by the resilience of gold to ‘only’ decline $100, despite rising US bond yields and a stronger USD. Unless the investment case radically changes – which I lay out below – the risks are skewed for near-term downside, although there is a growing potential for a reversal and strong rally into year-end. The technical set-up Since rejecting the $1981 supply zone on 20 July the ensuing bear trend seems to have hit exhaustion, with gold shorts starting to pair back exposures – there is a risk a short covering could take price into the 38.2% fibo of the $1987 to $1884 decline at $1925, which could offer better levels to initiate swing shorts. Trading intraday has been a challenge for many day traders as volatility has been so low – Gold’s 30-day realised volatility has fallen to 8.3% and the lowest since July 2021. We also see the 5-day average high-low trading range at $14.11; one of the lowest daily ranges for years. Traders need to adapt to these tighter ranges, and many have traded with a tighter stop and increased position size to accommodate for the low vol. One can easily justify these sanguine conditions given the investment case for the bulls has been lacking. For gold to reverse higher these dynamics need to shift. Notably: • The opportunity cost of being overweight gold – market players can get a 5.44% risk-free yield in US 6-month T-bills. Gold has no yield, so in a rising rate environment, gold can often face headwinds. • There is a similar dynamic in the bond market where US 10y-year ‘real’ rates have risen to 2% - again, there is an opportunity cost of holding a yield-less asset. • Gold has been a poor hedge – with cross-asset volatility at such low levels and equity markets recently performing so strongly the need to hedge risk in the portfolio has been reduced. However, funds have favoured the USD to hedge potential equity drawdown given its deep inverse correlation with S&P500 futures. Gold has a positive 30-day correlation with the US500 or NAS100. • The USD effect - Over the past month, the USD has rallied against all G10 currencies – with US data continually coming in hot we see US Q3 GDP expectations sitting above trend at around 2.2% • With US growth above trend, recession hedges have been unwound. We see this in interest rate pricing, with the market pairing back expectations of Fed cuts in 2024 from 160bp of cuts in June to 110bp of cuts. Traders can see the level of expected rate cuts by looking at the spread between SOFR Dec 2023 and Dec 2024 futures (TradingView code - CME:SR3Z2023-CME:SR3Z2024). Gold – another classic recession hedge – has been shunned. Positioning Looking beneath the surface we can see a solid flush out of bullish gold positioning – longs have been paired right back. But has positioning swung too far, and could this offer an entry to look more favourably at upside potential? • Total (known) ETF holdings of gold sit at 90.05m – the lowest since March 2020 having fallen 18% since October 2020. • We see gold positioning in the futures market has been reduced - net long futures positions held by managed money (in the weekly CFTC report) now sit at 29,356 contracts – having been as high as 116k net long contracts in July • CTA (Commodity Trading Advisor – trend-following funds) accounts are max short gold futures but may need to see the price the futures prices above $1980 to start trimming this position. • Gold 1-month option risk reversals (1-month call implied volatility – put implied volatility) sits at 0.07 – the lowest level since March. Options traders are shying away from positioning for upside movement. Are we about to see a turn higher? As Richmond Fed President Thomas Barkin said on 22 August, the US economy could accelerate further, which could hold big implications for Fed policy and challenge the consensus of easing growth and potential rate cuts. While we continue to watch global growth data points, we could also feasibly see US headline inflation accelerate higher in the August CPI print (released 13 Sept) from 3.2% to 3.6%. This could result in increased expectations of a November rate hike (from the Fed), which could lift the USD and real yields. Gold would likely face another leg lower in this dynamic, but would also likely see volatility pick up and trading ranges expand – a more compelling dynamic for CFD traders However, should inflation pick up near-term, resulting in the Fed likely to hike again, it would then accelerate the belief in lower demand and increased recession risk. It is here where expectations of interest rate cuts would increase as higher rates and a higher-for-longer stance from the Fed should accelerate the risk of recession in 2024. If and when we see growth data points subsequently roll over, resulting in additional rate cuts priced for 2024, then gold could feasibly have a strong rally into year-end. As always, an open mind to changes in economics and the subsequent investment case for gold will serve traders well.
PEPPERSTONE:XAUUSDShort
by Pepperstone
1
US 10-year real rates (TIPS) – the rising true cost of capital US 10YR ‘real’ rates are essentially US 10yr Treasuries adjusted for 10yr inflation expectations – TradingView users can set this up using the equation: TVC:US10Y-FRED:T10YIE. We can see this as the true cost of capital and in effect, the higher yields rise the more this supports the USD and negatively impacts US equity valuations. The rate of change (ROC) is always important, but if US 10yr real rates head to 2% then this may accelerate the selling in the US500 and NAS100.
TVC:US10YLong
by Pepperstone
USD Index road map with US CPI to come.Today's focus: USD Index Pattern – Ascending Triangle Support – 95.68 Resistance – 96.32 Today, we look at the USD index as price continues to trade rangebound after fighting back from a two-day decline. Could today’s CPI data break the deadlock and give the market some direction? Traders will be watching to see what today’s data could do for rate rise expectations. Could a move above expectations lift price above resistance and get the current trend back on track? Or could a miss to the downside confirm an LH and break the trend, setting off fresh selling? If we see the data come in flat, this could maintain the current price range that we are seeing at the moment. Keep an eye on today’s data when it’s released at 8:30 am EST, as it could produce some volatility if the figure comes out outside of market expectations. Have a great day and good trading.
EIGHTCAP:USDX
by Eightcap
✨ MODIFICATION: EURUSD ✨ THE BIG PICTURE (5D)TECHNICAL ANALYSIS: TP5 @ 1.2115 (closing ALL Buy Orders) TP4 @ 1.17850 (shaving 25%) TP3 @ 1.1250 (shaving 25%) TP2 @ 1.1100 (shaving 25%) TP1 @ 1.0933 (shaving 25%) BLO1 @ 1.0820 ⏳ BLO2 @ 1.0800 ⏳ VIDEO TIMESTAMP: 00:00 ECB News 02:53 Where Do We Go From Here? 03:32 A Noisy Intermediate Time Frame (4H) 04:55 Key Support/Resistance Levels (4H) 06:01 Institutional Buying Targets 06:42 Safe Haven Currencies 05:52 Interest Rates and Safe Haven Currencies 08:47 Position Sizing with R:R @ 1:1 10:20 Best Buying Opportunities ⭐ 11:04 The BIG PICTURE Analysis ⭐ 13:28 BIG PICTURE Anticipatory Trend 16:31 Boost, Follow, Comment, Join FUNDAMENTAL ANALYSIS: During today's EUR News trading session, the EURUSD initially tried to rally or, as we call it, exhibited a false positive. Still, the market gave back gains as the European Central Bank raised its key interest rates as anticipated by 25 basis points up from 3.50% to 3.75%. So, considering this, where is Price Action going from here? Since April 02, 2023, @ 18:00, it's been a very noisy range. This range is our current price curve analysis. It lands between the Pivot Low of 1.0788 and the Pivot High of 1.1095 and, therefore, places Support @ 1.0945 and Resistance @ 1.1086. Based on the 4H chart, we should be clear for a downtrend breakout if price action opens and closes below our Support Level. A breakout pattern to the downside would also mean Price Action is pulling back from its BIG PICTURE uptrend pattern. Therefore, we should find Institutional Buying Targets around 1.0820 and 1.0800. Considering the US dollar to "safe-haven" currencies like JPY or CHF, we need to be cautious about our position sizing because this will continue to be a volatile range. We're going to have to "ride the wave" professionally. Right now, I see a lot of short-term buying and selling opportunities until Price Action reaches its 4-hour Demand Zone around 1..0800. Once we're there, the longer-term opportunity to buy will be ours.
Long
by ProfessorCEWard
4
AUD Bucks Trend after Fed Hikes Rates to 22-Year High The Federal Reserve has decided to increase interest rates by 25 basis points, reaching a range of 5.25% to 5.50%, marking the highest level seen in 22 years. Market participants widely anticipated this move as the Fed resumed its tightening campaign. In their statement, the Fed expressed a positive outlook on economic growth, acknowledging that economic activity has been expanding at a moderate pace, which is a subtle improvement from the previous characterization of "modest" growth. The focus on consumer prices remained, with the Fed emphasizing that inflation continues to be elevated, and policymakers will closely monitor the risks it poses, mirroring their assessment from the previous month. Following the announcement of the Fed's decision, the U.S. dollar retreated across the board. This movement in the dollar contributed to a boost in gold prices and an immediate focus is now on the $1,973 minor resistance and $1,978 further above. An exception to the general trend is the Australian dollar, which bucked the trend after data revealed that domestic inflation slowed more than expected in the second quarter. This decrease in inflation reduced pressure on the Reserve Bank of Australia to implement further policy tightening measures. The data showed that Australia's consumer price index rose by 6%, a deceleration from the 7% recorded in the first quarter and below the market's expectations of 6.2%. Consequently, the Australian dollar weakened to approximately $0.676.
by BlackBull_Markets
Harmonically, US Interest Rates are Headed Toward 35%The US Interest Rate chart has been trading within a Descending Broadening Wedge and has recently broken out of the wedge. The target for a pattern like this is typically back to the inception of the pattern, which in this case would be 20%; but we also have an additional variable here, and that's the Potential Logscale Harmonic Formation we've made here. If we are to treat the action of this chart as we'd treat any other chart, then we'd expect that once B gets broken, we'd get an accelerated move all the way up to the Harmonic Completion of a Bearish Shark, which would land us at the 1.13/1.618 Harmonic Confluence Zone up at around 34-35% There have been previous instances where Harmonics have had a predictive quality over data like this, such as the accelerated liquidity exit out of the reverse repo facility, the bond yield charts on multiple occasions, and the US Inflation Rate Charts. Which can all be seen in the related ideas tab if you are skeptical of my use of Harmonic Patterns in this context.
ECONOMICS:USINTRLong
by RizeSenpai
Correlation study: 10-year real interest rate vs. AAPL (1983 - )Apple share price (AAPL) plot above, inverted real rates (0-REAINTRATREARAT10Y) plot below + 1M 200ma, from 1983 to 2023. Results: -Strong inverse correlation with 10-year real interest rates and AAPL share price. -Real rates < 2 % positively correlate with stronger AAPL returns. -10-year real interest rates bounced from the 2 % level in September 2022 ... May 2023. "‘John Bull’, says someone, ‘can stand a great deal, but he cannot stand two percent. . ." - Walter Bagehot, 1852
FRED:REAINTRATREARAT10Y
by Smitty61
1
GBPUSD DOUBLE SETUP BEFORE ECB RATESIn April, UK GDP grew by 0.2% m/m, recovering from the previous month's decline of -0.3% m/m. The rebound was driven by the services sector, with services expanding by 0.3% m/m and contributing 0.26 percentage points to overall GDP growth. The wholesale and retail sector, as well as the information and communication sector, made significant contributions. However, manufacturing and the health sector experienced declines. Manufacturing contracted by 0.3% m/m, with the pharmaceuticals sector playing a major role. The construction sector also declined by 0.6% m/m due to a slowdown in housing activity. Overall, UK GDP growth remains relatively stagnant, but PMI surveys indicate increased activity in April and May, especially in services, projecting a 0.3%-0.4% q/q growth rate for Q2. However, the extra bank holiday in May is expected to result in a significant contraction in GDP, potentially impacting the entire second quarter, although the effect on Bank of England policy is expected to be minimal. Nicola, CEO Forex48 Trading Academy
by Forex48_TradingAcademy
USDCAD SHORT SIGNAL BEFORE FED RATESUSD/CAD faces downside pressure as the Loonie outpaces the decline in the USD Index. The pair has dropped sharply, reaching the support level of 1.3300 after encountering resistance at 1.3320. Upbeat oil prices provide support for the Canadian dollar, as investors anticipate a neutral interest rate policy from the Federal Reserve. This positive sentiment reduces fears of a US recession. Traders should monitor oil prices and the Fed's stance on rates. The Loonie's accelerated decline suggests a bearish sentiment. Overall, there is downward pressure on the USD/CAD pair, but careful analysis of economic and geopolitical factors is essential for informed trading decisions. Nicola, CEO of Forex48 Trading Academy
Short
by Forex48_TradingAcademy
AUDUSD FOMC Prep 14th JuneThe AUDUSD approaches a key resistance at the 0.68 round number price level following a consistent climb since the start of June. If the DXY continues to weaken, down to the key support level of 103, the AUDUSD could break above the immediate resistance level of 0.68 and rise toward the next resistance level at 0.6920. However, the 0.68 resistance level is very crucial as the AUDUSD had previously reversed strongly from this level on the 14th April and 10th May. A reversal could happen if the FOMC surprises markets with a rate hike. In the more likely scenario, if the DXY weakens, look for the AUDUSD to break above the resistance level, and test the upward trendline again before continuing on to the next resistance level.
Long
by JinDao_Tai
DXY Outlook FOMC Prep 14th JuneWill the Federal Reserve finally decide to pause on further rate hikes, keeping interest rates at 5.25%, or will the Feds hike rates one final time to take rates to 5.50%? There has been much speculation about the likely outcome of the US FOMC regarding its interest rate decision. Especially with the most recent CPI data being released at 4.0% (Expected 4.1% Previous 4.9%) a significant slowdown in inflation growth is being witnessed and it is likely to play towards encouraging the Feds to pause on further hikes. Although the June unemployment rate rose slightly to 3.7%, the NFP was still significantly stronger than expected at 339k. There are several technical analysis factors applying the downward pressures on the DXY, in particular, the downward trendline, 50MA and the 103.40 resistance level. If the Feds does pause on rates, I'd be looking for the DXY to trade down to the support area of 102.80 and 103, which coincides with the 50% Fibonacci retracement level.
TVC:DXYShort
by JinDao_Tai
US 10Y yield chart - key levels to watch ahead of dataWe have a big week of data US inflation figures are released tomorrow and are likely to show a continued disinflationary trend, with the headline rate falling to 4.1%. This will help the Fed remain on pause for the Wednesday rate decision. The major level to watch to our mind is the tentative downtrend drawn from the October 2022 high. This comes in at 3.88. The market has been sidelined for months but is building a potential bullish consolidation pattern and that idea will be reinforced should a close above the 3.88 downtrend be seen.
TVC:US10Y
by The_STA
Are you dripping into your 401k yet?Are you dripping into your 401k yet? Not bad area to start dripping in imo for longer term positioning. Dovish powell, in reality it was all stated before and thats why we've had the market really for weeks/months softening rate hikes - the real question is when they will actually STOP! Now, we are at key resistance area, I like the next area of resistance 4200-4300. I'd appreciate any pull back for ES & NQ key tip: The market is forward looking Trade your own plan TJ
CME_MINI:ES1!
by Trade_Journal
Dollar Got it's 50 day MA touch and should continue it's descentTraders, As you know everything is about the dollar rn. What it does determines what the rest of the U.S. market does. And, so far, what the U.S. market does has been helping us determine what Bitcoin will do. Bitcoin, being the lead dog, shows us what the remainder of the alt space will eventually do. This is how we follow the breadcrumbs to our next projected bull move. As you know if you have been following me for any length of time, I have been calling for a blow-off top in the U.S. stock markets. This will be followed by a more serious recession that very well could become hyper-inflationary in nature, meaning that it will take many, many more dollars to buy a thing. This "thing" would include anything from eggs to shares. The market is smart (but sometimes a little slow) and will eventually price this inflationary pressure (or dollar weakness in). When the dollar goes up, it's strong. It takes less dollars to buy a thing. So, markets generally go sideways or down. When the dollar is up and the VIX (fear index) is up, the markets almost always trend down. When the dollar is down and the VIX is down, the market will fly. The VIX is down currently. So now, we simply need to determine which way the dollar could continue. From my perspective, the overall trend remains descending. We have now touched the 50 day moving average, which, as you know, I had been hoping for for some time. The price movement is completed and we can now expect further downside and a retest of that larger Head and Shoulders neckline. Should that neckline break? Bye bye U.S. dollar. It is at this moment you will know the blow-off top has truly begun. We can expect new highs in our market to come before our recession. Best to you all in your trades during these times, Stew
TVC:DXYShort
by stewdamus
The wedge pattern on cable! Bears waking up? So far this year, Cable has made significant progress. However, the fifth wave’s potential for further growth appears limited due to its final leg within a higher degree impulse, as evident on the daily chart. Interestingly, there have been instances of sluggish price movement and overlaps around the 1.23 area. This prompts us to question whether this could be the fifth wave nearing resistance at 1.26/1.27, potentially forming an ending diagonal (wedge) pattern. These patterns often result in sharp reversals, so caution is advised for bullish traders, particularly considering the absence of buyers even on a “hawkish BoE” day. It is possible that speculators are losing hope for the Bank of England’s ability to curb inflation.
by ew-forecast
1
A traders' week ahead playbook - A fresh set of challenges awaitMarquee event risks to navigate: Debt ceiling headlines – President Biden meets with Congressional leaders on Tuesday to try and inject some urgency in forging an agreement to raise the debt limit before 1 June. We’re already seeing clear stress in US T-bills maturing in mid-June, so the market is certainly taking the threat of moving past the June X-date seriously. Given the tight window to negotiate, there is a tight window which increases the possibility of a short-term extension. It seems a matter of time before traders start to look at the JPY and gold as the default debt ceiling hedges. US CPI (Wed 22:30 AEST) – the marquee data point of the week. The consensus estimate is for headline CPI at 0.4% MoM, and 0.3% MoM on core CPI, with the core YoY pace eyed at 5.5% (from 5.6% in March). With the market not pricing any hikes for June it would need a big upside surprise to see the market price in hikes for the next Fed meeting – interestingly, in the past 6 CPI prints the USD has fallen in five of those (in the 5 minutes after the data drops), while gold has rallied in all 6 occurrences. A print below 5.3% would see cuts being priced for June and price July as a 50:50 proposition; a clear positive for gold and see the NAS100 push towards my 13,800 target. Fed’s Senior loan officers survey (Monday at 04:00 AEST) – with the market looking for a tightening in lending standards, resulting in a credit crunch and potentially future recessionary conditions, this survey matters. Fed chair Jay Powell knew the outcome and mentioned the survey in his press conference last week, detailing the survey will show tighter lending practices. The survey has historically been well correlated where tighter lending standards results in wider corporate credit spreads and drawdown in the S&P500. BoE meeting (Thursday 23:00 AEST) – Given the recent inflation print, the BoE should almost certainly hike by 25bp, with the market fully pricing this outcome. The split in the MPC voting may matter, with the markets discounting that the BoE hike again in June and possibly August. GBP has been strongest vs the JPY and EUR, with EURGBP eyeing a break of the YTD range lows. GBPUSD trades at the highest levels since May 2022 and while it’s tough making a call on GBPUSD with US CPI due this week, I’m not fading this strength just yet. US PPI (Thursday 22:30 AEST) – The market will pick and choose when it wants to react to the PPI data point, so it’s a risk event to consider. The consensus is we see PPI +2.5% YoY (from 2.7%), with core PPI eyed at 3.3% YoY (from 3.4%). While the PPI data is important (especially when considering corporate margins), unless we see a big surprise, I’d expect market moves to be fairly contained over this print. China (April) credit data – there is no set time for the credit data (new yuan loans, M2 money supply and aggregate financing, but given credit has been largely front-loaded in 2023, to support the re-opening, it should be expected that new yuan loans and aggregate financing fall significantly from the lofty levels we saw in March. An outcome above RMB1400b (in new yuan loans) could boost China’s markets and China proxies (AUD and copper, for example). The CHINAH index is tracking a range, but I see scope for a push into 7000. China CPI/PPI (Thursday 11:30 AEST) – the market sees CPI at a lowly 0.3% YoY (from 0.7%) and PPI at -3.2%. In a world of high inflation, China is the clear outlier and a below-consensus reading could see renewed calls for policy easing – China’s bond markets are finding solid buyers of late (yields lower) and this may start to impact, with a weaker yuan the possible result - watch USDCNH as a guide and any upside in this cross (yuan weakness) could weigh on the AUD and NZD. US April NFIB small business optimism (Tuesday 21:00 AEST) – this is a survey I am watching very closely given the leverage US SMEs have to the smaller and regional US banks. The market sees the survey coming in at 89.8 (from 90.1 in March), which if correct, would be the weakest read since 2013 and a sharp decline from levels seen in 2021. Australia govt FY 2024 budget (Tuesday 19:30 AEST) – the budget is being viewed on three main ideals: the cost-of-living relief, economic growth, and Australia being more resilient to international shocks. One that should get media airtime, and could impact the AUS200, but it’s unlikely to be a driver of AUD volatility. AUDUSD shorts have been covering and we see price testing trend resistance, but the big level remains the Feb- May range high at 0.6800. Fed speakers – Kashkari, Jefferson, Williams, Waller, Daly, Bullard ECB speakers – Lane, Rehn, Vasle, Schnabel, Centeno, De Cos, Guindos
PEPPERSTONE:USDX
by Pepperstone
Forex Update: EURUSD struggling at resistance with ECB to comeToday's focus EURUSD Pattern – Resistance stall Possible targets – 1.1165 Upside 1.0965 downside Support – Resistance – 1.1065 Indicator support – ECB meeting MA slope up With the ECB to come, we are focusing on the EURUSD as price continues to be held at 1.1065 resistance. Price has continued to trade in an up trend but, for now, remains held back at resistance that started in April. The ECB could be a short-term catalyst tonight. Rates are expected to be increased by 25 points. The talk is that the ECB could step back as core inflation slowed to 5.6%, and the inflation figure sits at 7%. A larger-than-expected credit drop and tighter leading criteria are other factors that could maintain the trend of small hikes. Another 25-point hike is forecast for June. Another possibility could be a reduction in the balance sheet. QT has already been happening with a reduction in the massive bond holdings. Price-wise, we will need something positive from the ECB to drive the EURUSD higher. Price continues to weaken at resistance, and the USD, another factor, continues to firm today. If the ECB confirms that rates may not rise as much as expected, it could push the EURUSD lower, maintaining resistance. If we see a hawkish surprise in the statement, this could be enough for price to break resistance and start a new leg higher. Don't forget about the USD and tomorrow's NFP. The USD is holding above 100.80 support, and if it can form a solid comeback with a more dovish ECB could set the EURUSD up for a leg lower. Thanks for stopping by. Good trading, and have a great day.
by Eightcap