XULF Report
As anticipated dire GDP numbers from Europe yesterday forced gold to break $1420 support with a weakening EUR/USD pair providing a catalyst and it smashed through the $1405 target making a low of $1387. Japanese GDP was released this morning showing Prime Minister’s Shinzo Abe’s stimulus attempts are paying off which should provide some short term fundamental support for gold given Japan are a large importer of the metal. Possible downside pressure on gold could occur when the US markets open as computer network giant Cisco Systems delivered better than expected quarterly results after market hours which could set a bullish tone for equities.
The 4 hour chart manifests how the decline has paused for breath and the two hammers side by side, along with the RSI moving back above 30 indicates a retracement is ready before the bearish trend takes control again. As I write price is $1396 therefore place a long stop loss below the low at $1386 or place a tighter stop loss just below a higher low on the 5 minute chart at $1393 or $1389. It’s best not to be too greedy during retracements therefore target around $1405 which is the 38.2% Fib level of yesterday’s drop.
The 15 minute chart shows the loss of downward momentum and the recent sharp decline of $10 to $1387 followed by a steady incline displays how the short term trend is changing. A firm break up pass today’s resistance at $1397 should lead to a retracement to $1405.
Be aware of weekly US Jobless Claims and Building Permits tonight as investors will have a close eye on these numbers for further evidence of economic recovery which could impact gold.
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