XAUUSD - Double top confirmed
An update to my post made on Wednesday (3rd July) - the double top scenario has now played out, confirming at the 1430+ levels, bulls are quite happy taking profits given the size of the rise during June.
With the huge NFP number today from the US, one of the items used to drive and support the price of gold has been the concern of the strength of the US employment market, the rogue 75k number from May may now be treated as a one off and this will also have reduced the chance of the FED reducing interest rates by 50bps.
2 key items remain that will offer some support to gold:
1) US and China trade talks which have dominated headlines, the move by Trump to allow Huawei products to be purchased is a step in the right direction,
a change in stance here could offer both support and pressure on the price over the summer months.
2) Pressures in Iran - whilst this hasn't been center stage, any changes or moves here will also offer both support and pressure on the price over the summer months.
In terms of technicals, i like to use EMA to understand the change of trends and support they offer. On the 4hr we can see the low of the day was right on the 100EMA around $1388, whilst this has held for now it will depend on the strength of the close of the Dollar Index and if gold can hold onto the 1400 handle.
I believe a close below $1400 will open the door to test the $1383 area early next week, whether this will hold as support, we will have to see - next stop after that will be $1340 area.
I still like the long term view of gold, however given the size of the move in June, In my opinion, it needs to clear the deck before moving on to the next level. This will also help to bring the weekly RSI back from an overbought level last seen from the 2011. A quick review of the weekly you will see that each time the weekly RSI has exceeded 70, the price has pulled back roughly 10%, using this weeks data, $1435 - 10% brings us back to roughly $1300........
All of the above is only my opinion and is not investment advice.
With the huge NFP number today from the US, one of the items used to drive and support the price of gold has been the concern of the strength of the US employment market, the rogue 75k number from May may now be treated as a one off and this will also have reduced the chance of the FED reducing interest rates by 50bps.
2 key items remain that will offer some support to gold:
1) US and China trade talks which have dominated headlines, the move by Trump to allow Huawei products to be purchased is a step in the right direction,
a change in stance here could offer both support and pressure on the price over the summer months.
2) Pressures in Iran - whilst this hasn't been center stage, any changes or moves here will also offer both support and pressure on the price over the summer months.
In terms of technicals, i like to use EMA to understand the change of trends and support they offer. On the 4hr we can see the low of the day was right on the 100EMA around $1388, whilst this has held for now it will depend on the strength of the close of the Dollar Index and if gold can hold onto the 1400 handle.
I believe a close below $1400 will open the door to test the $1383 area early next week, whether this will hold as support, we will have to see - next stop after that will be $1340 area.
I still like the long term view of gold, however given the size of the move in June, In my opinion, it needs to clear the deck before moving on to the next level. This will also help to bring the weekly RSI back from an overbought level last seen from the 2011. A quick review of the weekly you will see that each time the weekly RSI has exceeded 70, the price has pulled back roughly 10%, using this weeks data, $1435 - 10% brings us back to roughly $1300........
All of the above is only my opinion and is not investment advice.
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