Technical analysis of XAUUSD
Gold has moved up strongly so far today, moving clearly about $1,800 for the first time in over two months. The limited uncertainty in stock markets this week amid plans by the American government to raise taxes has given the yellow metal a boost. Senior members of the FOMC have generally downplayed comments by Treasury Secretary Janet Yellen that rates would surely need to be raised this year. This technical analysis of XAUUSD looks at the daily chart ahead of tomorrow’s non-farm payrolls (NFP).
High resistance is not very clear on this chart. $1,870 is a possibility, while the next key psychological area of $1,900 is in focus above that. Low support might occur around $1,680 which has been tested unsuccessfully twice since early March. $1,700 is a psychological area of possible importance to the downside as well.
Technical indicators on XAUUSD D1
Moving averages give a sell signal, with each of the 50, 100 and 200 SMAs successively below slower lines. However, the price has now pushed above the 50 SMA from Bands and the 100 SMA. The 200 SMA around $1,830 seems to be an important near-term resistance around tomorrow’s NFP, but equally a strong release or otherwise a hit to sentiment over the next couple of days might see price moving back towards the value area between the 50 and 100 SMAs.
There is no sign of overbought from the slow stochastic (15, 5, 5) which currently reads about 72. However, Bollinger Bands (50, 0, 2) do give a signal of buying saturation. The contraction of Bands over the last few weeks might be seen as suggesting a new trend to come in the near future.
Price action and Fibonacci
Price action over the last fortnight suggests reluctance to move much below $1,760. The breakthrough from $1,800 today though makes more upside favourable unless tomorrow’s data are particularly surprising or sentiment shifts drastically over the next few days. In the context, the weakly defined rising wedge from the very end of March might give a weak buy signal but this should not be acted on in isolation.
The main area in view for now from the weekly Fibonacci fan is the 38.2%. This might be a stretch target over the next few weeks if price can move past the 200 SMA. We can also probably expect the 50% weekly fan to support a more modest upward movement that might develop in May. To the downside, a test of the 61.8% weekly fan is unlikely for now given the expected strength of $1,680 as a support and that third tests are generally weaker.
Technical analysis of XAUUSD: summary
The consensus for the NFP at the time of writing is about 980,000, somewhat better than last month’s 920,000. Conversely, the American economy is still short approximately 7-8 million jobs compared with the peak in February 2020. Meanwhile the rate of unemployment in the USA is projected to decline to 5.8% against last month’s 6%. Beyond gold-dollar, traders of currencies will also be looking ahead tomorrow to Canadian job data and German balance of trade.
In general, the technical picture for gold is reconfiguring towards a buy signal but it’s difficult to hail an accumulation on higher timeframes just yet. Short-term trading is usually in vogue around the NFP, but some longer term traders might find appropriate entries to buy during tomorrow’s volatility.