XULF Report
The gold decline continued through yesterday but seems to have found a bottom at $1221 and is currently trading in the $1230’s. The shocking final measure of US GDP for the 1st quarter which was revised down to 1.8% from 2.4% which is bad news for the economy but good news for stocks as the Dow Jones had a triple digit rally. Gold hasn’t reacted as well but has managed to climb a few dollars however the outlook still looks bearish.
The 1 hour chart shows the latest candlestick has printed a engulfing bearish whilst simultaneously making a lower high whilst at the same turning around resistance. Three factors signalling bearish on one chart means we are likely to see gold move lower from here and maybe test support towards the lower $1220’s. Place stop above previous candlesticks high around $1245 and target support in the lower $1220’s which offer a good risk to reward ratio. If price begins to make new highs it is probable the reversal will take place.
The daily chart’s RSI is still converging with price action by showing lower lows which signals price isn’t ready to reverse just yet.
Economic influences traders need to be mindful of today are the Italian 10 year Bond Auction which unfortunately has no specific schedule but is likely to be around 10am GMT, the UK’s Current Account at 9:30 GMT and US Weekly Jobless Claims and Pending Home Sales 13:30 and 3pm GMT respectively.
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