XULF Report
Gold continues to slide reaching a low this morning of $1338 closing in on April’s low of $1321. The fall is mainly attributed to the Fed’s talk of reducing stimulus, a weakening Japanese yen and growth concerns in Europe and China. US Consumer Sentiment released on Friday night gave a boost to equities and consequentially applied more pressure to gold extending the bearish trend. There is a possibility gold could get a respite from this hammering after comments from the Japanese Economy Minister highlighting the potential negative impact of a weakening yen on the Japanese people that brought some sellers to the USD/JPY pair.
The 15 minute chart shows how the market is consolidating after the bears launched another attack this morning to make a low of $1338. Price is trading increasingly tighter displayed by the triangle therefore be poised to trade after a breakout from the consolidation and the intra-day trend asserts itself. If price breaks $1338 expect a bear attack to test April’s low $1321 although it is likely there will need to be fresh headline news for gold to drop below this level without a fight from the bulls.
The 4 hour chart shows the strength of the decline since it broke through $1420 support last Wednesday. There will be potential shorting opportunities as price draws nearer this bearish trendline as another crowd of shorts attempt to attack this market. This will offer a smaller risk entry compared to shorting the market now. Considering the strength of the trend bulls should wait for price to break up past the trendline shown on the chart because this will indicate the decline is decelerating.
There is a substantial amount of economic news that could affect the markets this week including Federal Reserve Chairman Ben Bernanke testifying in front of Congress 10pm Wednesday and manufacturing and services PMI data from Europe Thursday afternoon therefore reduce exposure around these times and trade carefully.
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