Source: PaxForex Premium Analytics Portal, Fundamental Insight
With risk aversion continuing to dominate, financial markets at or near all-time highs, and the Covid-19 pandemic intensifying despite vaccinations, traders should consider taking a more cautious approach. A new variant of the Covid-19 virus in India carries two mutations, making it more aggressive, spreading faster, and potentially more dangerous. Hospitals around the world are filling up as governments lifted restrictions, ignoring warnings from healthcare officials.
Economic data shows signs of weakness, the labor market remains under stress, and the short-term positive boost of trillions worth of debt-funded stimuli are set to expire during the second quarter. Inflation data has become more important as it began to tick higher, supply chain disruptions intensified after the Suez canal was blocked for over a week, and complacency by the majority of market participants warrant a closer look at safe-haven assets like gold and silver. Markets punished both precious metals and pressured them into attractive support levels.
The forecast for the GOLD/USD turned bullish after selling pressure took it down towards the 1,700 level. After the Kijun-sen and the Tenkan-sen flatlined, bearish momentum is fading. It also allowed the Ichimoku Kinko Hyo Cloud to end its descend and stabilize. Gold presently recorded a higher low, and if it can maintain it, an upside swing is likely to follow. The CCI plunged into extreme oversold territory, and traders should monitor it for a drift higher before adding buy positions in the GOLD/USD. Can bulls gather forces and power gold into its next horizontal resistance area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for GOLD/USD remain inside the or breakout above the 1,699.00 to 1,714.20 zone, the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1,705.00
- Take Profit Zone: 1,819.30 – 1,842.00
- Stop Loss Level: 1,677.50
Should price action for GOLD/USD breakdown below 1,699.00, the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1,677.50
- Take Profit Zone: 1,605.80 – 1,632.80
- Stop Loss Level: 1,699.00
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