Technical Analysis December 6th: Gold drops

06 December, 2017 - 07:45AM

EURUSD, Daily timeframe

Bias: Pair in Uptrend

The euro has been falling the past few days. Yesterday, the pair dropped another 54 pips. We have to be aware, however, that this Friday we have the Nonfarm payrolls from the U.S. with a projected drop in the number of people employed in the private sector. This could lead price to revert so we have to be cautious of that too.

Scenario 1:

Price could head toward the immediate support at 1.1700. The level could be an area for doing business on the long side if a daily bullish rejection candle occurs. Prior to a trigger signal no pre-emptive longs should be initiated. Targets are 1.1900 and then 1.2065.

Scenario 2:

If price breaks and closes below 1.1700, next immediate support is located at 1.1500. This could be another possibility to go with the trend. A bullish signal is obligatory for a long setup to be in place.

Scenario 3:

The pair could be ranging if trapper between two levels- 1.1700 and 1.1900. If trades are to be open, those should be only in direction of the established trend and not trying to capture retracements.

 

GBPUSD, Daily timeframe

Bias: Pair in Uptrend

Prior to Friday, the pair could be sending mixed signals. We’re observing movements in both directions. Even though price dropped on Tuesday in the late afternoon hours of the day it started to recover and push up toward opening price.

Scenario 1:

If price closes above 1.3550, this would be in continuation of the uptrend. Timing is also key here. On Friday, we could see a lot of activity in both directions. So, it may be wiser so await the news to come out and then figure out our positioning stance. Targets above are 1.3650 and 1.3700.

Scenario 2:

The resistance level at 1.3650 could provide a wall for price to overcome. If we see the pair respecting the level, this would be in the form of a price rejection with the day withdrawing form the level and closing with a bearish engulfment. A strong bearish day of at least 100 pips below 1.3650 could send price lower. Immediate support level is located at 1.3285.

Scenario 3:

If price closes below 1.3250, this could mean that the sentiment has turned into a short-term bearish one. Immediate support is located at 1.3050. This could also provide a level for going long (only if there is a clear bull candle pattern0.

 

AUDUSD, Daily Timeframe

Bias: neutral

The Australian dollar shows hesitant price action with price trying to close at opening levels. This uncertainty could prevail until Friday when the market is awaiting the high-impact Non-farm payrolls. The levels to monitor are the following:

Scenario 1:

Price could test 0.7550 once again. If there is another bullish candle testing and then rejecting the level, we could dip into a starter position (never with both feet) into a potential long. Target above is 0.7750.

Scenario 2:

The target at 0.7750 could provide a level of resistance and we would know if this is the case if price rejects it and pulls away from it. If this happens on a daily timeframe, we could actually go short. Levels below are 0.7500 and then the farther 0.7300.

Scenario 3:

Price could move sideways if nothing major hits the wires. This is the scenario that doesn’t offer favorable conditions for trading. It’s best to stay out of consolidations when those patterns are predictable.

 

Gold

Bias: Uptrend

The precious metal (along with the euro) dropped significantly lower on Tuesday. We saw the commodity weaken in price by about 130 pips. Price is now below 1265.00 support level. If the week closes with a negative bearish candle, this could offer us a chance to reposition ourselves.

There is plenty of potential on both sides. We just have to be smart and play our cards right.

Scenario 1:

If price falls, it could test the immediate support at 1260.70 support area. This would prolong the ranging movement of the commodity and it could mean that money flows to other markets (the dollar, pound, etc.). We’re interested in markets that move with clarity of direction and movements that are in synchrony with the established trend.

Scenario 2:

If the price of gold recovers on Friday and trades above 1300.00 and closes the day above it, that would be movement outside of the boundaries of the range that we’re currently in. This is the move we want to see. Target above is 1350.00. This could be brought about by considerably weaker NFP numbers on Friday from the U.S.

The market is holding its breath until the event comes out. So we have to be wary of the market’s reaction after the numbers are out. Very often, markets try to price in the reaction they’re expecting on the day of the news. We’re yet to see what opportunities the market could offer on Friday.

 

Wishing you happy and successful trading!

 

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