Gold raises a bullish flag, EUR/USD stays afloat above May’s lows [Video]
|Gold raises a bullish flag, but how strong are the bulls?
Gold optimism started to shine again after the creation of a bullish hammer candlestick on Friday, which succeeded the sharp bounce on May’s bottom of $1,786/ounce.
The price is currently pushing for a higher close slightly above the $1,810 level, trying to confirm the green bullish candlestick formation. Yet, some caution is still required given the negative trend in the RSI and the MACD, which keep hovering within the bearish area.
More importantly, the market is setting up a death cross between the 50- and 200-day simple moving averages (SMAs) after the bearish cross between the 20- and 200-day SMAs last week, suggesting that any upside correction might only be temporary and part of the original negative trend.
Nevertheless, if bullish forces persist, the precious metal will attempt to crawl above the broken support trendline seen at $1,825. Should efforts prove successful, the recovery may continue towards the $1,845 – $1,855 key region, where the longer-term SMAs and the upper boundary of the bearish channel are positioned. Further up, the price may face some congestion around the $1,870 barrier before accelerating towards the surface of the short-term bullish channel at $1,890.
On the downside, the $1,786 – $1,777 floor will remain under the spotlight. If it cracks, the downtrend could stretch towards the support zone around $1,760, while lower, all attention will turn to the 2021 barrier at $1,723.
Summarizing, gold has charted an encouraging candlestick pattern, flagging a potential turnup in the price, but negative risks haven't completely evaporated yet. Perhaps a durable advance above $1,825 could reduce skepticism and motivate additional buying.
EUR/USD stays afloat above May’s lows; bias still bearish
EURUSD managed to stay afloat above the downtrend’s bottom line of 1.0348 for the third time despite its bearish weekly close. Nevertheless, negative risks keep lingering in the background.
Particularly, the 20-day simple moving average (SMA) has resumed its negative slope after failing to cross above the 50-day SMA, while the RSI and the MACD are also pointing to the downside, with the former distancing itself below its 50 neutral level and the latter deviating beneath its red signal line.
In the event the price tumbles below the 1.0348 floor, breaching the 2017 low of 1.0339 too, the sell-off may intensify towards the crucial 1.0200 psychological level, where the pair changed direction twice during 2002. That might be the last opportunity for a rebound before the pair reach parity. Additional bearish actions from here may next test the 0.9900 number.
On the upside, the 1.0480 – 1.0520 territory and the 20-day SMA appeared as hurdles last week. Hence, a successful extension above that bar could provide direct access to the descending trendline and the 23.6% Fibonacci extension of the 1.1494 – 1.0348 downleg at 1.0620. Higher, the recovery is expected to pick up steam towards the 38.2% Fibonacci of 1.0789, where any violation would put the negative trend at risk.
In brief, although EURUSD maintains a neutral short-term trajectory above May’s 5½-year lows, technical signals remain bearish. Traders may wait for a move below 1.0348 or above 1.0620 before they act accordingly.
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