Gold Gets Rekt After Fake Break
Another week of heartbreak for Gold bulls...
Gold geared up for a breakout on Monday and on Tuesday, price action finally tested above the 1850 level. This was confluent with a bearish trendline connecting the ATH to the November swing-high. Given the rather healthy bullish construction that had showed in the few weeks prior, the door seemed open to upside. But with the Federal reserve rate decision just 24 hours ahead the breakout seemed suspect, this took place during my webinar on Tuesday. I highlighted at that point how attractive the setup could be for a fade under the premise of a false break. ( 40 minutes in youtu.be/0aPe43GjET0)
The big driver here is the Fed and real rates, and with rates markets gearing up for a more-hawkish Fed the fundamental backdrop does not appear supportive for Gold bulls. Some banks are now calling for as many as seven rate hikes this year and while I don't think that will actually happen, I do think the threat of such can continue to push the risk envelope for a bit, so I maintain a bearish stance on Gold .
The bigger question here is one of timing as this week's short-side move was fast and aggressive. Prices are now finding support at the 1784 level and I think this can lead to a short-term bounce. Prior supports at 1792 and 1800 have already shown as short-term resistance. There's also a prior support swing at 1805 that can be interesting, as a test above 1800 would likely sucker some into chasing the long side. Above that 1815 remains as resistance and I'm going to keep this as an 'r2' level for next week. And as 'r3' I'm going to keep the same 1830 spot which was a major level - holding three resistance inflections before becoming support ahead of the false break. A resistance test here cannot be ruled out and similar to a test over 1800, that would likely trigger quite a few stops.
Underneath price action there's a Fibonacci level at 1771 that remains of interest, and below that we have the current 3-month low at 1752. The 'big' level of support in Gold is 1680 which currently marks the floor of a descending triangle formation, which caught another vote of confidence this week with the bearish trendline holding another inflection.
Gold geared up for a breakout on Monday and on Tuesday, price action finally tested above the 1850 level. This was confluent with a bearish trendline connecting the ATH to the November swing-high. Given the rather healthy bullish construction that had showed in the few weeks prior, the door seemed open to upside. But with the Federal reserve rate decision just 24 hours ahead the breakout seemed suspect, this took place during my webinar on Tuesday. I highlighted at that point how attractive the setup could be for a fade under the premise of a false break. ( 40 minutes in youtu.be/0aPe43GjET0)
The big driver here is the Fed and real rates, and with rates markets gearing up for a more-hawkish Fed the fundamental backdrop does not appear supportive for Gold bulls. Some banks are now calling for as many as seven rate hikes this year and while I don't think that will actually happen, I do think the threat of such can continue to push the risk envelope for a bit, so I maintain a bearish stance on Gold .
The bigger question here is one of timing as this week's short-side move was fast and aggressive. Prices are now finding support at the 1784 level and I think this can lead to a short-term bounce. Prior supports at 1792 and 1800 have already shown as short-term resistance. There's also a prior support swing at 1805 that can be interesting, as a test above 1800 would likely sucker some into chasing the long side. Above that 1815 remains as resistance and I'm going to keep this as an 'r2' level for next week. And as 'r3' I'm going to keep the same 1830 spot which was a major level - holding three resistance inflections before becoming support ahead of the false break. A resistance test here cannot be ruled out and similar to a test over 1800, that would likely trigger quite a few stops.
Underneath price action there's a Fibonacci level at 1771 that remains of interest, and below that we have the current 3-month low at 1752. The 'big' level of support in Gold is 1680 which currently marks the floor of a descending triangle formation, which caught another vote of confidence this week with the bearish trendline holding another inflection.
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