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Gold Technicals – 1,300 Broken, But Further Bearish Acceleration Suspect

Last Friday’s US Non-Farm Payroll gave Gold the bearish push that we’ve been looking for, sending price resolutely below 1,300.

Generally there is a fear that such news inspired move may not simply be a one-time correction/overreaction. In this case the likelihood of such happening is even higher, as prices were actually trending sideways above 1,306 between Monday and Thursday. Bears did push below 1,300 briefly on Thursday, but recovered quickly and traded sideways once again – giving the impression that prices would have continued trading sideways if not for the NFP push.

Hourly Chart

XAUUSD_111113H1 [1]

In this regard, this morning’s bearish move is a good confirmation that a bullish pullback is not going to be in play right now. However, prices are still some distance from breaking 1,284 – 1,285 the soft support last Friday post NFP. Only by trading below the aforementioned level then would further bearish conviction be confirmed. Without which, the chance of prices pushing up towards 1,290 increases – this does not necessary mean that price would automatically push up higher but certainly the chances of price action reverting to the pre-NFP sideways trend increases.

Unfortunately for bears, the bearish momentum does appear to be stretched with Stochastic readings within the Oversold region. Even though this morning’s decline prevented a bullish cycle signal from emerging, the additional allowance given most likely will be utilized fully when prices hit Channel Bottom, increasing the likelihood of a move back higher eventually. Nonetheless, with overall short-term bias remaining bearish, there is a chance that price may still straddle Channel Bottom lower instead of rebounding higher, but that would mean that Stochastic readings will remain extremely Oversold – not an impossibility but certainly a unwelcome monkey on the backs of those who are trading the 1,284 – 1,285 breakout.

Weekly Chart

XAUUSD_111113W1 [2]

Weekly Chart suggest that bearish momentum is in play, extending the Channel Bottom bearish rejection that occurred 2 weeks ago. However, even Stochastic indicator here suggest that prices may not be able to extend current bearish run for much longer as readings are close to the Oversold region already. Hence, a move all the way towards Channel Top beneath may be stretching it, and it is likely that prices may find some slight support from the recent swing low around  1,250 – if we even reach there that is.

More Links:
Week in FX Americas – Jobs Here, Jobs There, Jobs Everywhere [3]
Week in FX Europe – ECB Pulled The Trigger And Kept The Door Ajar [4]
Week in FX Asia – Commodities Focus On Chinese Plenum Expected Reforms [5]

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Mingze Wu

Mingze Wu [10]

Currency Analyst at Market Pulse [11]
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu
Mingze Wu

+Mingze Wu [14]