Gold's relief rally is showing signs of exhaustion

2022年11月8日

Gold's general commentary prior to last #7 - #10 sessions: So far so good as I have concluded both of my Short and Medium-term Selling Targets (closing both Short and Medium-term Selling orders (#1,622.80 and #1,615.80), Highly satisfied with my Trading results). I announced possible Buying correction on Gold due DX easing off Overbought levels, Price-action has recovered half of the opening losses on the E.U. session opening as DX was taking big Daily candle hit. However the rise is still not proportional as Bond Yields and global futures are still on Lower levels. This leads me to believe that on the Short-term, there is a stronger connection of Gold to DX, rather than Bond Yields, so I will keep an eye for pressure zones on DX. Technically the Daily chart was isolated within broken / former Descending Channel on it’s Lower High’s, as Resistance has to break since last couple occasions it provided rejection twice (#1,682.80). I am expecting strong move to take place throughout this week. Despite the Bullish Fundamental outcome on announcements last week, Gold continues to Trade near the #3-Week High’s. This indicates that last week's aggressive Buy-off on Bond Yields was largely a pre-pricing of those Fed Rate numbers. What's obvious as the current week will come to a close, is that the consolidation similar to one throughout Friday’s session was not just above the Daily chart’s Support Zone (#1,648.80 - #1,652.80) which lifts the probabilities for an aggressive Selling sequence ahead, especially as Weekly chart (#1W) remains marginally Bearish. Interestingly, the Weekly candle is flat almost on zero percent. I remain fully Bearish on the Short and Medium-term, however my Technicals are showing some Bullish signs but those will be invalidated once the Support configuration is broken and Selling bias formed on Hourly 4 chart (Gold is purely rising (Buying every dip) on Buying pressure from DX on spiral downtrend, Bond Yields aswell struggling to make Bullish comeback, but on much Lower pace comparing to DX numbers). Price-action also manages to keep the mid-to-High levels despite the steep decline on Bond Yields and very sharp takedown on Usd-Jpy pair. Especially the fact that Usd-Jpy broke it’s Daily chart’s Support zone, adds light Buying pressure on the Short-term, however with it's own Daily chart having regained complete Bearish status on the Short-term for the first time since September #27. On the Short-term though, the Price-action is testing the inner Support cluster and may require to have small pullback in order to accumulate more Selling pressure to convincingly break #1,652.80 this time (I have announced that #1,633.80 might stall the downtrend last week). As soon as the new market dynamics, post-Fed candles find their prior balance, fair Technical Price of Gold will be near #1,615.80.


Gold's Intra-day trend: Ranged Price-action came as no Technical surprise as Price-action remains in Rectangle on a combination of Fundamental pressure and Technical necessity for a Lower Low’s extension. It is closely related to currency Volatility on DX (and the economy related Fed’s talks where I expected dovish surprise stance) as the Price-action was near equilibrium with DX also on Weekly scale and even if the pair completes it’s Bearish pattern, Gold should not Technically soar above #1,682.80 extension. On the Short-term side, there is an clear Resistance and Support zone, limiting Sellers advances to it’s maximum. Gold should already Trade widely below #1,652.80 psychological barrier, but with such DX numbers, both sides are equally probable as tests seems more likely to develop and showcase Short-term Buyers and Sellers presence. Hourly 4 chart points that Higher Low’s Upper zone is near and Support the Price-action at #1,662.80 which makes it an possible Hourly 1 chart’s Descending Channel variance - typical Target of similar sequence includes #1,633.80 - #1,642.80 on Short-term. In extension - I will advance with extreme care ahead of the most significant macroeconomic events of the week and since my model leans more to the Bearish side and Fundamentally Gold may soar.


Technical analysis: Gold has hit (even marginally crossed) the #1,662.80 - #1,672.80 Resistance zone on Daily chart and based on my estimations, Bullish consolidation is over (or at least showing signs of exhaustion). Even though the Weekly chart’s multi-Month Descending Channel is about to be in invalidated, now #1,652.80 psychological mark represents the new Support (former Resistance) and is close to the ultimate Neutral Rectangle holding on #17-session horizon. Bond Yields are still on Bullish gradient overall and the DX is still on majority charts pressing the Medium to Long-term Support fractal, I see no reason for Gold to move Higher than today’s session numbers, unless those cross instruments start moving to favorable directions for Buying sustainability. I see current upwards spike on Gold mostly as filling the Gap and in my opinion, #1,652.80 mark should be next if #1,662.80 gets invalidated. Spot also an interesting fractal, which resembles a lot the current Price-action: November #2019 and the bounce from the #1,445.80 bottom, cross of Hourly 4 #MA50, failure to break #MA200 and then back down to #1,450.80. There is also possible Double Top rejection (Hourly 4 chart September #20 - #21, and October #1 - #2), however Hourly 4 chart is still isolated within healthy Ascending Channel.


My position: Keep in mind that Selling sequence on DX got rejected precisely on trendline (#1W chart) and even though multi-Month Descending channel almost got invalidated on Gold, configuration is far from ideal for Buyers who want to over-extend the Buying motion. #1,672.80 got invalidated and if #1,662.80 breaks, I am expecting #1,652.80 mark in extension.