After seven consolidation sessions where gold was fluctuating between 80+ and the 70s area, gold has finally given a clear sign of deeper dips and washes than the Oct. 6 daily bullish grabber candle, at 1260 low. Yesterday, gold extended the correction phase, clocking a 1282.60 high, then started deprecation gradually. But after the European Central Bank's dovish scenario that left the euro to aggressively plunge, the Dollar Index (DXY) began to strengthen, hitting a three-month high at 94.60, and gold submitted, closing one hour below 70, then extended losses at 1265.80 low.
Today, gold traded narrowly inside yesterday's candle with 1264.80 low, then started another correction phase till 1269. It is currently trading 1268 Intraday.
Technically, yesterday's bearish candle is to be considered engulfing for the Oct. 6 bullish grabber, and it erased all the scenarios for any potential upward trend reversal. At this moment, the market should expect some upward corrections between 72 and 78, but the 1250-45 zone still persists. Add to that, the fact that 10-year yield bonds were also rising, with a 2.47 high today, this will add more pressure on gold along with a strong greenback.
Fundamentally, the market is awaiting U.S. GDP, which will be released today at 12:30 PM GMT. The market has two possible scenarios. In both cases, whether data is negative or positive, and taking into consideration that DXY levels at H1 and H4 are oversold at RSI, gold will react to the data, and could rally shortly, around the 72 and 76 levels. But eventually the 1250+/- will be achieved (technically). The other scenario is that gold could start falling, reaching the 1260-58 support area, and start an upward correction retracement, also at the 70s area, and again, the 1250+/- should be achieved (technically).
Last but not least, and to add an unpleasant scenario that could reverse the technical overview is the real political tension between North Korea and the U.S., with serious actions. In this case we will see gold shift as a safe-haven substitute, and it will start rising gradually depending on the level or pace of the events.
XAUUSD Technical Summary
Current price: 1268
Closing price: 1267.60
Trend: Down
Target price: none at this moment
Trend Reversal price: 1291.40
Resistance levels: 1270-72, 1282
Support levels: 1262.50 , 1260, 1250+/-
Comment: The market is bearish and is suggesting a bear extension to test around the last swing low in the 1264-1261 levels. A close under 1260 opens up potential near 1250. Any corrections trapped within yesterday's outside bear range should retain bear forces and bear flag. A pop over 1282.30 is needed to stop pressing bear forces, however, only a close above 1291.40 will shift the bear to a bull trend.