XULF Report
Gold has taken a hammering in the last 36 hours as Federal Reserve Chief Ben Bernanke implied that if the current trend of economic progress continues the exit of stimulus will begin. Although the language used was very similar to previous statements highlighting that any slowdown is data dependent and that the Fed are not comfortable enough at present to give specific timelines which makes the battering of gold seem a little overdone. Maybe that’s why gold has surged $20 to around $1290 this morning after making a low of $1269.50.
Technically the daily chart looks oversold according to the RSI, Stochastics and the Bollinger Bands any potential bulls need to wait 24 hours after such a decline to make sure the market has stabilized on lower volatility. If today prints a mildly bullish reversal candlestick look for long opportunities on Monday and by then the aforementioned indicators will have triggered the buy signals. Be aware that this strategy is risky because it entails going against the trend and the overall bearish trend could resume itself at anytime. Therefore take profits when a bearish candlestick prints or target the 38.2% Fib retracement level at $1314. The main event today is Bank of Japan’s Governor Kuroda who is talking at a press conference at 7:45 GMT and his aim will be to reinstall confidence into the Japanese stock market by reinforcing the intent on weakening the yen and achieving 2% inflation therefore USD/JPY could have a surge and be back on track to its long term bullish trend dating back to November and this will give more power to the bears. Taking into account the fragility of gold, the oversold levels and Kuroda speaking today make sure you trade extra careful with both long and shorts because there could be sizeable moves.
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