Chapter 15  XAUUSD: Two-way Fluctuations with Oscillation in Search of A Breakout(4.26)


On Wednesday (April 26) in Asian hours, spot gold fluctuated to the upside and briefly traded above the 2000 mark today. Overnight market concerns about the banking sector rebounded and the U.S. debt ceiling crisis worries intensified. U.S. stocks plunged and U.S. bond yields recorded the largest one-day decline since March, which provided support for gold prices. However, risk aversion fell back slightly in Asian hours. Gold prices are still suppressed by the 2000 mark resistance, maintaining the recent volatile pattern.

U.S. Treasury Secretary Yellen warned that if Congress fails to raise the government debt ceiling, the resulting default will trigger an economic disaster and lead to rising interest rates in the coming years. Bipartisan consensus on the U.S. government debt ceiling has not been reached and the market also began to expect the risk of increased U.S. debt default may trigger a serious recession. On the other hand, the banking system risk may not be over yet. The First Republic Bank earnings report further intensified concerns about deposit outflows, asset-liability mismatches and the risk of a credit crunch. Funds have moved to safer money fund markets with the fearing of liquidity risks. The Financial Times reported on Tuesday that even the White House is increasingly concerned about First Republic Bank's ability to stay out of bankruptcy. Due to these factors, gold prices' short-term main line is still to go long at lows.

This week still needs to pay attention to the quarterly GDP data released on Thursday and the core personal consumption expenditure (PCE) price index released on Friday. The latter is the Fed's favored inflation indicator. The market is expected to be lower than the previous value. The downside of gold prices may still be limited, or a better trading opportunity. On the market, short-term bearish signals for gold are diminishing and the volatility is narrowing. You need to be alert to gold prices or their possibility of going higher with fluctuation.

Today's trading reference range is 1980-2005.

Technical Analysis

In the daily chart, short-term moving averages are more disorderly and intertwined. MACD forms a death cross, short-term strengths and weaknesses are not obvious. In the past few trading days, gold prices repeatedly fell below the 1980 mark after a rapid recovery, suggesting that the lower buying support is stronger. The initial above resistance is near 2015 and further resistance is around the line of 2032. It is expected to open a new upward channel if it can break through the resistance.

But at the same time, considering that the top has repeatedly stopped in the region from 2005 to 2015, it is still necessary to guard against the fluctuation of the gold price peak risk. The initial support below is in the 5-day moving average near 1994, then the support is near the 1980 mark, and the strong support is in the last three weeks low near 1969. The short-term space below will also be opened if the support is lost.

XAUUSD: Two-way Fluctuations with Oscillation in Search of A Breakout(4.26)-Pic no.1

Trading Recommendations

Trading direction: long

Entry price: 1980

Target price: 2015

Stop loss: 1959

Support: 1980.000, 1969.000

Resistance: 2015.000, 2032.000

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