Gold 1 OZ (XAU=X) trading weaker despite doubts
Gold futures are trading lower early Tuesday after yesterday’ rally drove the market to its highest level in a week. The precious metal is trading weaker despite doubts about how quickly China’s factories could get back to work given that the coronavirus continues to spread and deaths mount.
On Monday, gold hit its high for the session after the World Health Organization (WHO) warned the spread of coronavirus among people who had not been to China could be “the spark that becomes a bigger fire”.
In China, factories were slow in re-opening after an extended Lunar New Year break, leading analysts at JPMorgan to again downgrade forecasts for growth this quarter.
“The coronavirus outbreak completely changed the dynamics of the Chinese economy,” they said in a note.
On paper, the news appears positive for gold prices, however, gains will be limited as long as the U.S. Dollar remains firm, Treasury yields steady and demand for risk strong. Furthermore, traders may be anticipating a somewhat hawkish tone from Federal Reserve Chairman Jerome Powell on Tuesday and Wednesday, since he’s not likely to find any reason to alter the central bank’s current “wait and see” policy.
Daily Swing Chart Technical Forecast
Based on the early price action and the current price at $1571.60, the direction of the April Comex gold futures contract on Tuesday is likely to be determined by trader reaction to the 50% level at $1570.60.
A sustained move over $1570.60 will indicate the presence of buyers. The first upside targets are a minor top at $1580.50 and a 50% level at $1581.20.
Taking out $1581.20 could trigger an acceleration into the Fibonacci level at $1590.30. This is a potential trigger point for an acceleration into the main top at $1598.50.
A sustained move under $1570.60 will signal the presence of sellers. The first downside target is a 50% level at $1565.80. This is a potential trigger point for an acceleration into the $1551.10 main bottom.
If $1551.10 fails as support then look for the selling to possibly extend into the main bottom at $1542.80 and the major 50% level at $1539.10.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 1,597.22.
The projected lower bound is: 1,542.23.
The projected closing price is: 1,569.72.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 32 white candles and 17 black candles for a net of 15 white candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 64.6428. This is not an overbought or oversold reading. The last signal was a sell 10 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 55.36. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 10 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -20. This is not a topping or bottoming area. The last signal was a sell 6 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 6 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAU= closed down -3.990 at 1,567.910. Volume was 8,900% above average (trending) and Bollinger Bands were 32% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1,570.14 1,530.03 1,461.69
Volatility: 14 11 15
Volume: 7,863 1,573 393
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
PREC.M.XAU= is currently 7.3% above its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect very strong flows of volume out of XAU= (bearish). Our trend forecasting oscillators are currently bearish on XAU= and have had this outlook for the last 1 periods.