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XAUUSD Gold Forecast: Time to shine?

Fundamentals drive Gold prices higher last week.

  • Central Banks – lead by BoJ and ECB –  warn of growing risks to the global economy

“To be honest, if U.S.-China trade tensions are drawn out, there will be a serious risk to the global economy – first to the two countries’ own economies,” Kuroda said during a news conference following the BOJ’s monetary policy meeting.

“The risks surrounding the euro area growth outlook have moved to the downside on account of the persistence of uncertainties related to geopolitical factors and the threat of protectionism, vulnerabilities in emerging markets and financial market volatility,” ECB President Mario Draghi said Thursday during his press conference.

  • FED is next in line. Wednesday FOMC Statement will be released.

Markets are not expecting any rate hike next week and see a 31% chance of one rate hike by the end of the year. Fed officials have sent a clear message that they intend to be ‘patient’ during Q1 with further rate hikes on hold until uncertainty dissipates as long as inflation remains stable. If the statement will reflect this shift by emphasizing downside risks more clearly and acknowledging the recent moderation of economic growth in the first paragraph, we can see Gold prices

  • Friday NFP and Unemployment data will be released.

We will keep an eye on wage growth as that will have the biggest impact on the FED. In December’s employment report, wage grew 3.2% for the year. If we don’t see strong wage growth in January, it may give the FED another excuse to be patient with its monetary policy

  • Ongoing worries about the global economy and continued geopolitical uncertainty. may increase the demand to safe-haven assets.

Technically:

  1. Sustainable bullish run and the shorter-term trend change from bearish to bullish would be confirmed by a firm daily closing above $ 1312 – Breakout and close above yellow fractal trendline on the Daily Chart –  A clear U-turn from the FED is needed to see this breakout as we explained above. Please note that the line has been tested a few times in 2018 by the Gold Bulls – I was one of them – but failed to be broken. Strong fundamentals are needed.
  2. If we see this clear breakout, the target of the Gold Prices will be            $ 1356- $ 1375.
  3. Above $1375 is the trend reversal level. ( Not before 2019 Q4 )

What’s making me focus on a bearish correction?

  1. On the daily chart, a Bearish Max Gartley supported by the fractal trendline – Area of the short entry 1309-1310
  2. On the smaller charts Bearish Alt Bat and Bearish Butterfly patterns which I have published on Friday – Area of the entry 1303-1308-
  3. Overbought RSI readings on H4 chart.

Conclusion: 

  1. Gold is likely to be traded sideways until FOMC.
  2. We may see volatility on Wednesday.
  3. Wage Growth, NFP will draw the next path.

My Trade Plan: ( Until we see the FOMC statement & NFP + Wage Growth Figures )

Sell Gold at $1305 and $1308 Targets: 1296 1285 1265 Stop Above 1312.

If Gold prices end the week above $ 1312

Buy Gold with the targets $1320 $1341 $1356 Stop Below: 1296

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XAUUSD Gold: Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. Chartreaderpro does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility

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