XAU/USD Technical Analysis | Forexlive
On the daily chart below, we can
see that the market has switched to a downtrend as depicted by the cross to the
downside of the moving
averages. The sellers are in control, but the buyers have been fighting quite
hard lately as the momentum to the downside has been fading due to the market
awaiting March economic data to see if the February data was just a blip due to
seasonal factors or the Fed has indeed slowed its rate hike cycle too early.
Gold is sensitive to the
direction of real yields as when those go up the price of gold generally falls
and vice versa. The market repricing higher interest rates weighed on gold due
to hot economic data in February, so if we keep getting strong economic reports
in March, gold is likely to fall further.
On the 4 hour chart below, we can
see that the selling momentum was fading going into March as depicted by the divergence between the price and the MACD. It will be crucial now to watch
the economic data, because technically the price now can rally all the way up
to the 1902 level as the trendline was breached.
The moving averages have also
crossed to the upside signalling a change in the short-term trend. Today we
have the ISM Manufacturing PMI and if the report comes out
strong, then this upward move from yesterday may have been just a fakeout, but
if the data misses expectations, we should see another rally.
On the 1 hour chart below, we can
see more closely the breakout from yesterday. The red long period moving
average and the support at 1828/1830 will be the last
line of defence for the buyers. If the price falls below the trendline and the
support zone, then the breakout would translate into a fakeout and a bigger
selloff should follow.