Filed Under:
Forex pairs in this Article » XAU/USD
By: Dailyforex.com

Although gold prices declined three days in a row, we are still trapped in a small trading range bounded by the Ichimoku clouds on the daily and 4-hour charts. Technically speaking, the thicker the Ichimoku cloud, the less likely it is that prices will manage a sustained break through it. In our case, the XAU/USD pair will need to close either above 1347 or below 1300 before it can resume trending. Lately the American dollar has gained some strength after economic data out of the United States came out better than expected but gold investors have been keeping their focus on the possibility that the U.S. Central Bank will keep its asset buying program in place a little longer than they thought. The price action we saw in the last couple of days suggests that market participants are in a cautious mode ahead of the Federal Reserve’s policy meeting, at which we may see more clarity into the tapering issue. The Federal Open Market Committee concludes a two-day meeting today. Until the announcement, gold prices will probably continue to respect the ascending channel. That means the 1320 level where the top of the Ichimoku cloud (4-hour chart) and the bottom line of the channel reside will be supportive in the short term. If this level remains intact and the XAU/USD pair starts to climb, the first challenge will be waiting the bulls at the 1340 level. As I mentioned earlier, a successful close above the 1347 level might provide the bull the extra power they need to reach 1354.50, 1365.80 or even 1388. If the bulls encounter heavy resistance and prices reverse, the resistance zone between 1320 and 1300 will have an important role. Breaking below the 1300 level may trigger a sell-off targeting the 1275/66 area.

Gold Price Chart 1 July 31


Gold Price Chart 2 July 31


comments powered by Disqus
Trading Center