XAUUSD Channel-to-Channel Cycles. New Bull or 1700 next?

2023년 10월 7일

This is not the first time we chart these Cycles on Gold (XAUUSD), as we did our latest study on September 27 (see chart below) and we were quick to catch the break-out sell on the 1W MA50 (blue trend-line) towards the 1W MA200 (orange trend-line):

This time though, we add the Channel element as well as the unique US10Y/DXY ratio and the mix proves to be quite accurate. As you see every Channel Down (red) is formed on a rising US10Y/DXY ratio, which is naturally expected as both the US10Y and DXY are negatively (inversely) correlated to Gold. Similarly every Channel Up (green) is formed while the US10Y/DXY ratio gets neutralized.

Right now the ratio is on the rise, hence the Channel Down on Gold, and the price hit the 1W MA200 (orange trend-line) for the first time in 11 months (since November 07 2022) and immediately reacted with a bounce.

At the same time, the 1W RSI hit the top of the 2-year Support Zone. Every time the RSI hit this Zone, while the US10Y/DXY ratio was rising, Gold started to form its market bottom. The only time this RSI Support Zone got hit and Gold didn't rise was when the ratio was declining (July 11 2022). Right now we have the conditions for a market bottom as the ratio is rising.

Next week will be critical as if it closes the candle in green and the RSI reverses, then we can see a 1-month bottom formation that will lead to the new Channel Up. If not, we can't rule a price as low as 1700.

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