In the middle of April Gold run above the $1295 level
due to the fact that the post-March rate hike rally extended further. But since
then the price started to move to downwards along with the upcoming FOMC rate
decision on Wednesday. The relevance of Fed’s rate hike is quite meaningful,
considering that during the the past six months we witnessed the two rate hikes
which fuelled markets and set the bullish tone in the wake of the policy’s
tightening.
Today
XAU/USD came under huge selling pressure and fell to lowest level since
mid-April at $1254 and the current market price is $1255.
The
four-hour time frame is showing that price has moved below the 38.2% Fibonacci
retracement of latest March to April upleg at $1257, which was acting as a
strong support line. Technical indicators are located within extreme overbought
territory. RSI has lost directional strength, while stochastic is
displaying strong bearish momentum.
Major
resistance is seen at $1271 (23.6% of above mentioned Fibonacci retracement),
which is a very important level to consider, as being former support and April
26th’s high. A decisive break below $1249 would drag Gold price
towards $1239 (March 5th’s low).
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