GOLD Could FALL Before Reaching 1370 level Amid Risk ON Appetite
As seen, GOLD is trapped in a range bound trading and is currently en route to the crucial resistance level of 1370. However the real question lies whether the GOLD momentum can continue towards this crucial resistance amid a possible and likely RISK ON appetite in the financial markets?
Today FED chairman Powell speaks which could cause intense volatility in FX markets, however it seems the market has already priced in of what is to be expected of his speech today. Markets are already in a RISK ON appetite mode amid the resolution of trade war and tariffs being delayed by the president.
What is Risk-On Risk-Off
Risk-on risk-off is an investment setting in which price behavior responds to and is driven by changes in investor risk tolerance. Risk-on risk-off refers to changes in investment activity in response to global economic patterns. During periods when risk is perceived as low, the risk-on risk-off theory states that investors tend to engage in higher-risk investments; when risk is perceived to be high, investors have the tendency to gravitate toward lower-risk investments.
SOURCE: www.investopedia.com...risk-on-risk-off.asp
With the current trade war already coming close to a resolution, RISK ON currencies in this scenario such as AUD, NZD and the EURO could appreciate whereas RISK OFF assets and currencies such as GOLD, CHF and JPY could depreciate. However keep in mind these safehavens are not evenly correlated. For instance JPY could fall if the market are on FULL RISK ON mode whereas CHF could fall slightly given its assets are backed by GOLD itself.
On the Topic of GOLD, the yellow metal is precious and perceived by many as a good future investment given its rising longterm value! Therefore fundamentally it remains to be seen what the chairman of FED has to say today and if the US-SINO trade deal can be agreed soon and what are their terms behind the deal.
Technically speaking GOLD is headed towards the crucial 1370 resistance level where it has bounced off on a numerous occasions. Currently the price is confined in a rising steep daily channel as shown on the main chart. Should anything drastic happen such as a trade deal being closed to agreed then GOLD may breakout of the channel and head towards the rising trendline beneath. On the flip side if the trade talks are slow, then we can expect GOLD to respect the channel and head towards the 1370 level. After reaching there it could be a possible scenario that it keeps climbing or reverses to the lows depending on the technical and fundamental picture at that time.
It remains to be seen what happens. this is just my analysis and not a trade signal. shall the criteria meet i will post the trade signal in the new thread. cheers
Today FED chairman Powell speaks which could cause intense volatility in FX markets, however it seems the market has already priced in of what is to be expected of his speech today. Markets are already in a RISK ON appetite mode amid the resolution of trade war and tariffs being delayed by the president.
What is Risk-On Risk-Off
Risk-on risk-off is an investment setting in which price behavior responds to and is driven by changes in investor risk tolerance. Risk-on risk-off refers to changes in investment activity in response to global economic patterns. During periods when risk is perceived as low, the risk-on risk-off theory states that investors tend to engage in higher-risk investments; when risk is perceived to be high, investors have the tendency to gravitate toward lower-risk investments.
SOURCE: www.investopedia.com...risk-on-risk-off.asp
With the current trade war already coming close to a resolution, RISK ON currencies in this scenario such as AUD, NZD and the EURO could appreciate whereas RISK OFF assets and currencies such as GOLD, CHF and JPY could depreciate. However keep in mind these safehavens are not evenly correlated. For instance JPY could fall if the market are on FULL RISK ON mode whereas CHF could fall slightly given its assets are backed by GOLD itself.
On the Topic of GOLD, the yellow metal is precious and perceived by many as a good future investment given its rising longterm value! Therefore fundamentally it remains to be seen what the chairman of FED has to say today and if the US-SINO trade deal can be agreed soon and what are their terms behind the deal.
Technically speaking GOLD is headed towards the crucial 1370 resistance level where it has bounced off on a numerous occasions. Currently the price is confined in a rising steep daily channel as shown on the main chart. Should anything drastic happen such as a trade deal being closed to agreed then GOLD may breakout of the channel and head towards the rising trendline beneath. On the flip side if the trade talks are slow, then we can expect GOLD to respect the channel and head towards the 1370 level. After reaching there it could be a possible scenario that it keeps climbing or reverses to the lows depending on the technical and fundamental picture at that time.
It remains to be seen what happens. this is just my analysis and not a trade signal. shall the criteria meet i will post the trade signal in the new thread. cheers
