Choppy trade ahead?
Oil prices remain very choppy with gains today largely offsetting losses at the start of the week. We may have to wait for more hard-hitting economic data next week before we see the upper or lower ranges tested as the uncertainty appears to be preventing a serious move in either direction.
Should the January data prove to be a blip, it could put pressure on the upper end of the range as longer-term economic prospects improve, while another month of hot data could necessitate much higher rates and threaten a soft-landing, weighing on demand prospects. In the interim, choppy trading looks likely to persist.
Testing major support
Gold is edging lower again this morning, moving ever closer to a very interesting area of support between $1,780 and $1,800. There is a lot of technical support around here from the 50 fib – November lows to February highs – to the 200-day simple moving average. It was also previously a major rotation level and with momentum slipping on approach this time, it could prove to be the case again.
Ultimately, the data may determine how firm a support zone it will be but either way, how it reacts to this level could give a strong indication of sentiment in the markets at this time.
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.
Craig Erlam
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