Sell active / Gold may be Targeting #1,727.80 extension ahead

6 ביולי 2022

Gold's general commentary: Important Bearish Gold related developments as DX is comfortably Trading widely above the Higher High’s Upper zone on Weekly chart (#1W), currently above #20-Year High’s which should cause Gold to lose even more under the circumstances as an Hourly 4 chart’s violent Engulfing Bearish candle. The Lower Low’s rejection throughout yesterday's session on Bond Yields (# -2.58% notably) was Technically an confirmation for decline on Gold aswell (which may be used as another Selling opportunity), but I believe that crossing the Medium-term Resistance level on DX was the necessary Selling confirmation for Gold. I spotted moderate connection of Gold aswell with Usd-Jpy pair which leaves Usd-Jpy totally in Gold correlations assets list (so far the two are diagonally correlated). For now, I see only Bearish developments on all Gold charts, which shifted Gold from Neutral to Bearish regarding both Short and Medium-term, totally ignoring recent Oversold conditions.


Technical analysis: Gold initiated much needed Technical takedown which was isolated within aggressive Descending Channel, fuelled by Death Cross formation on Daily chart which is giving a hint that multi-Month Bearish cycle might be developing on Gold. According to my formula, last #4 times Gold touched the Lower Low’s Upper zone extension and movement got rejected, it resulted as an #27 point recovery, so if Buyers arise and as a result relief rally occurs, #1,786.80 (former Support) is the Resistance to monitor. On the contrary if Gold remains heavily pressured, I am expecting stabilization within #1,752.80 - #1,755.80 zone, however if that zone gets tested and invalidated on one try (untouched since October #12, #2021), then Long-term Sellers may arise and initiate full scale Selling oscillation towards #1,588.80 configuration (March #27, #2020 Year Bottom), subsequently if #1,678.80 Lower Low’s extension breaks. It is Natural to expect a relief pullback, but as long as DX is not pressured by disappointing numbers I expect smooth diagonal (DX - Gold) Trading fuelled by Fundamental pressure which will constantly impulse the DX, and add heavy Selling pressure on Gold aswell. Strong Bid / Ask Volume usually reveals that strong movement session is ahead, and if Gold breaks the #1,752.80 psychological barrier (level of utmost importance currently I mentioned many times on my remarks that will be certainly tested), could easily engage Selling sequence and even more aggressive test of Lower levels on Gold (such as #1,700.80 barrier) once #1,727.80 gets tested.


Fundamental analysis: Selling extension remains #1,727.80, as I doubt that Gold (on the other side) will pierce #1,900.80 psychological barrier (way above #1,800.80) this Year. Especially since Daily chart is critically Bearish once again, where serious decline may be pricing in ahead. I will treat #1,852.80 as an possible Ultimate Top and Medium-term re-Sell area, with the next Technical stop on already discussed #1,700.80 barrier (once #1,752.80 breaks and market closes one full-bodied candle below it), however I cannot rule out the strong correction (identical as on June #29) with #1,700.80 barrier in extension as an possible turning point and stabilization area regarding the Medium-term aswell. Bond Yields are still consolidating instead of rising on hopes of better macro-economic outlook. In essence the one works as counter to the other, hence Gold stays ranged still near the Bottom (even below) of the Bollinger Bands, visible on Hourly 4 chart configuration. This gives me the impression that Gold is more tied to the DX index movements at the moment than any other correlating asset, so I will Trade accordingly and take it into consideration. I am expecting FOMC meeting tonight to pressure Gold even more (spiking up the DX) which is going in Seller's favour.


My position: As it is evident on my remarks, I am heavily on Selling side and current developments point to yet another steep meltdown on Gold. Since my Profits range is excellent, I allowed additional risk and engaged Selling order with #1,770.80 as an entry point, Targeting #1,727.80 extension, representing local Low's. I will close my order near #1,752.80 Support zone if it delivers durability and reject the Selling sequence there.