XULF Report
Gold received another hammering yesterday falling to a low $1369 before bouncing back assisted by disappointing US data last night. Federal Reserve official John Williams speaking about reducing stimulus as early as this summer dampened the optimism on Wall Street but didn’t cause gold to drop any further. We are seeing a repetitive scene at the moment with economic data swinging from positive to negative and a constant wavering in expectations to the Fed’s next move which will add to gold’s volatility but definitely present opportunities. Today is predominantly absent of any potentially market moving scheduled data except US Consumer Sentiment later tonight therefore gold does have a chance to claw back some of its losses however given the current environment any recovery may be limited.
The daily chart is giving early signs of a possible reversal belonging to yesterday’s hammer and the fact that this hammer printed totally outside of the lower Bollinger band. In addition the RSI is hovering around the 30 level indicating this market is tinkering with the oversold territory. It is difficult to pick the turning point after such a drop but if the next wave is caught at the right time it can be very rewarding indeed. Do be aware though that we are in a strong bear trend and yesterday’s low of $1369 could be broken.
Drilling down further onto the 4 hour chart the Parabolic indicator has signalled a buying opportunity and a return to above 30 for the RSI. My suggestion would be to wait for further reversal confirmation before entering a long position by assessing the 15 minute and 1 hour charts looking for today’s decline to lose steam and a bullish candlestick to print. For added confirmation wait for a double bottom to form completing the neckline at $1393.
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