Chapter 8  XAUUSD: Limitations from Above and Below, Gold Maintains Oscillation(4.20)


Spot gold oscillated upwards during the Asian session on Thursday (April 20th) and is currently trading around 1993 USD/oz. Besides, several Fed officials have passed on signals for further interest rate hikes this week, the Fed's "number three", New York Fed's Williams stressed the signal for further rate hikes on Thursday morning, and the market has cooled expectations for the Fed to cut interest rates during the year, both continue to support USD and US treasury bond yields, putting gold prices under pressure. In addition, the eurozone, the UK, and other countries are under serious inflation, with the market expectation of the eurozone and the Bank of England's further interest rate hike heating up, concerning the gold bulls. Because the interest rates by central banks will increase the opportunity cost of holding gold, in the short term, gold prices are difficult to appreciate.

Moreover, according to the Fed's Beige Book, overall economic activity has changed little in recent weeks. During the reporting period, the overall price level remained on a moderate upward trend, although the pace of price increases appears to be slowing. Meanwhile, the US Republican Party proposed to raise the debt ceiling by 1.5 trillion USD or extend it to March 31st next year, but Goldman Sachs warned that the US debt ceiling crisis could be brought forward to June, with the US debt problem may reappear. So, gold prices still have a better allocation value, and for long-term investors, it is better to buy in a small position at lows, while for short-term traders, try to buy low and sell high within the range. Today's reference is in 1980-2005.

Technical Analysis

Daily chart: Oscillating downwards. The bearish engulfed signal is still valid at 2500, and gold prices are suppressed by the 5-day SMA and 10-day SMA. Simultaneously, the MACD releases a death cross signal after bearish divergence with an expanding opening, while the bearish signals dominate. Before breaking through the 5-day SMA near 1999, or 2000, gold will oscillate downward. The initial weak support should be near the 20-day SMA (1994), and further support will be at the level of 1980 and near yesterday's low (1969). If gold plummets below, then the strong support below will be near 1955, which is also the 38.2% Fibonacci retracement of the gain from 1805 to 2048. Then, it will be the low support near 1944 on March 27th.

Regarding the short term, the initial resistance, the 10-day SMA resistance, and Monday's high resistance will be near 2000, 2005, and 2015 respectively. The Candlestick Chart closed with a very long lower shadow on Wednesday, indicating that the support below is stronger. Short-term bearish signals will weaken if the gold price can return above 2015. Furthermore, strong resistance is near 2032, and gold shall gain a new round of appreciation if it breaks through this resistance.

XAUUSD: Limitations from Above and Below, Gold Maintains Oscillation(4.20)-Pic no.1

Trading Recommendations

Trading direction: Short

Entry price: 2000

Target price:1980

Stop loss: 2020.000

Support: 1980.000/1969.000

Resistance: 2005.000/2015.000

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