The US Dollar has been remarkably sluggish for the past few weeks despite being within a distinct Demand zone…
Gold’s Next Move Could Be Huge!
2023-05-24 • Updated
Let's dive into the world of gold. Currently, the price of gold, represented by XAUUSD, is stuck in indecision, hovering around the $1,975 mark. The market is anxiously awaiting two important factors: the release of the Federal Reserve's meeting minutes and the extension of the US debt ceiling. These upcoming events have stirred some mixed feelings among traders, leading to a cautious mood. On the one hand, there are hawkish speculations about the Fed's stance, which could weigh on gold prices.
On the other hand, hopes of avoiding a US default have supported the bearish sentiment surrounding gold. The recent decline in US Treasury bond yields and the US Dollar's retreat due to the deadlock in debt ceiling negotiations have also influenced gold's performance. The market sentiment remains sluggish as traders brace themselves for these critical events. Stay tuned, and keep an eye on how these factors unfold.
US Dollar - Daily Timeframe
The chart above is a line chart representing the price action on the US Dollar chart from the Daily timeframe. I have deliberately used the line chart because it is one of the easiest ways to figure out key levels of support and resistance and draw pivot zones. The pivot zone on the daily timeframe, as shown above, is based on the price levels with the most reactions. Let’s take a look at the candlestick chart for confirmation.
US Dollar - H4 Timeframe
From the price action on the H4 timeframe of the US Dollar, I could locate a drop-base-drop supply zone right in the middle of the pivot zone we marked earlier from the daily timeframe. Based on this criterion and the descending order of arrangement of the moving averages on the daily timeframe, I sense a likelihood of a bearish reaction from the marked zone. Now let’s see what impact this would likely have on the price of Gold (XAUUSD).
XAUUSD - Daily Timeframe
If the US Dollar comes under excessive bearish pressure from the areas I highlighted earlier, the outcome will lead to bullish price action on the Gold charts. The confirmations I have for this sentiment include; the pivot zone, ascending order of the moving averages array, and the drop-base-rally demand zone from the area marked with the horizontal arrow.
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A comparative examination of the strength of the US-Dollar often gives tangible insight into the direction of Gold (XAUUSD). The chart above indicates the expectation of a bullish price reaction from the demand zone
For those who may be unfamiliar with Price Action trading, the horizontal arrows represent areas where the market structure was broken. As you can see in the scenario above, price broke below the previous low at the two marked instances
Let's dive into the latest developments shaping the global economic landscape. Good news first: the threat of an unprecedented US debt crisis has receded, as US lawmakers passed a bill to raise the debt ceiling and avoid a catastrophic default. Phew! But don't pop the champagne just yet, because storm clouds are still looming. High inflation, rising interest rates, and sluggish growth are challenges that have yet to disappear.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Hey guys, this is the last full trading week in May, and many forward-looking individuals like myself are already preparing themselves to seize whatever opportunities June may have in store. On this note, I will review a few commodities that have satisfied my quest for swing-trading opportunities in the coming month. Follow me!