Yesterday, we called for stronger demonstration of the bear strength, and they duly delivered. The price broke the 1330 flexible support in early US session and reached a low of just under 1320
Reason for this decline appears to be more speculation that the Fed will announce a tapered Action QE in December - . A movement that pushed stocks and Treasury bills lower while shoring USD higher. In addition to a USD deepest draft lower gold, gold prices traded lower naturally the need for protection against inflation would be lower as well, resulting in little need and therefore demand for the yellow metal.
Graph 4 times
Currently, the price is a trend between 1322 and 1327, with the entire trading Asian session within this group of 5 dollars. In general, it would sound alarms for holders bear who still hold their shorts, but in this case, the lateral movement necessary to provide a break to the strong bearish momentum that started since the announcement of FOMC Wednesday, which is necessary to prevent the current dynamics of being overwhelmed.
stochastic readings agree, with readings showing a downward cycle that coincides with a test in 1322 following the holding of 1327. If successful, we could see a sharp drop of acceleration can potentially bring us closer to 1,300.
Weekly Chart
Weekly Chart is much more bearish than yesterday but we are still far from the most bearish scenario perfect when the farm price this week candle below last week's open and show a downtrend reversal Tweezers Top fresh on the heels of a bearish rejection of the channel bottom. It will be the icing on the cake if we could see stochastic readings pointing lower and possibly break below the signal line. Nevertheless, even if we close around the current level at the moment, the conservative traders can wait for action early next week and see if the market likes bearish configuration as it is, increasing the risk of an outbreak 1300 and potentially around 1,260 as reasonable downside target beyond.
This is in line with the bearish fundamental outlook with an EQ cone / end guarantee in 2014. Furthermore, demand for physical gold should fall with holiday celebration of India ended this week-end. The only factor that could still be fueling price of gold higher is institutional speculative buying, especially those who bought gold when gold was around low 1,0s. However, even this is suspect to the research interest COT opened lower week on week, suggesting that demand dries up.
That being said, it would be wise to remember that Fed Chairman Bernanke recently said that he himself does not include price movements in Gold. So do not assume and continue to manage the risks with both eyes open, although technical and fundamental are both pointing lower
Links:
Nikkei 225 - Gloomy Start. for November
GBP / USD - Finds Support at 1.60
AUD / USD - Continues to Drift Lower below 0.95
This article is only for general information purposes. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or its subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
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