The second quarter of this year was not kind to Gold. After setting a peak at $2070/oz in March, the price fell to $1680/oz with two upward corrections along the way with an average range of around $100.
A week marked by Fed decisions
On Wednesday 27 July, the US central bank – FED, will decide on interest rates. A further 75bp hike is expected. The June rate hike proved to be an opportunity for gold to rise, with the price rising by $40/oz overnight, but returning to pre-hike levels a week later and continuing its decline to a two-year unbeaten demand zone.
Technical analysis of Gold
In the past week, the price not coincidentally stopped at 1680, as the repeatedly tested demand zone is located there. On the weekly chart, we can see that the demand zone has, since March 2020, repeatedly stopped price declines and initiated upward swings. Two of these have formed a double top formation for which the 1680 level is the neckline. The MACD oscillator is still in a downward phase.
On the daily chart, Thursday’s candle formed a bullish engulfing formation (upward outside bar) together with Wednesday’s candle. On Friday, the gold price broke out of the formation and the MACD oscillator entered an upward phase (green). According to the PA+MACD strategy, this could initiate an uptrend.
The demand target may be the defeated channel support. The increases may be short-lived, after Wednesday’s FED decision the gold price may be very volatile and it is worth taking this into account when planning to open a BUY order.
This week 25-29 July I am pleased to invite you to several online sessions. Below is the schedule of meetings:
The above analysis is based on the PA+MACD strategy, a detailed description of which you can read HERE . I will talk more about the PA+MACD strategy applied to these currency pairs during the live trading sessions which you can attend from Monday to Friday.
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