XULF Report
Another quiet and range bound period is expected today as the markets wait for Bernanke’s comments at the FOMC press conference on Wednesday scheduled 19:00 GMT. Taking into account the mixed bag of data and the unspectacular May Non-Farms Bernanke is likely to reiterate stimulus reduction is data dependant therefore gold looks like it could be stuck in the $1375 to $1390 range for some time to come. There could be some volatility beforehand if the US housing data tonight shows further improvement in new builds which could cause a spike in equities and suppress gold but it does feel like gold needs a significant shift in the fundamental outlook in order for the bears to gain control over the bulls.
Keep looking to sell at resistance and buy at support levels displayed by shooting stars and hammers and/or two or more touches of a certain price level as this is the best way to capture a few dollars of profit before we see the big next move. It is worth noting the bullish trendline that is visible on the 1 hour chart coloured green. As I write price is sitting on the trendline making its fourth touch so there could be an opportunity to achieve a short term profit via a bounce or break. The red horizontal line displays shorter term resistance at $1385 that has received 3 touches so far today so again look for bounce or breaks at this level.
Taking a longer term view from a technical perspective remember the two side by side shooting stars on the weekly chart which has now been followed by a bullish hammer. The shadows on the shooting stars are longer than the hammers shadow meaning the bears still have the upper hand so look for good entry levels to short if you don’t mind taking on the risk and volatility that will occur on Wednesday. Sometimes candlesticks do not have immediate effects but can influence price at a later date.
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