Gold, The Chart of the Week: XAUUSD bears licking their lips, watching for lower timeframe distribution

Gold could be about to move into a phase of distribution.
The rally is decelerating on the lower timeframes.

Ross J Burland FXStreet

As per last week's pre-open analysis, Gold, Chart of the Week: XAUUSD bulls pushing up against key resistances ahead of US CPI, where it was explained that there were prospects of a bull correction to fully test the bear's commitments with a focus on the US Consumer Price Index data for the forthcoming week, Gold indeed moved higher as the following will illustrate:

Prior analysis, Gold weekly charts

The price was accumulating at a prior structure in three weekly bottoms.

That W-formation looked menacing for the week ahead with prospects of a push into the trendline.

The Crab harmonic pattern on the daily chart was also a bullish feature:

The price had already slid out of a micro trendline and was accumulating on the backside which opened risks of a move higher.

Gold update, weekly chart

While it is still early days, this could be the makings of a prolonged bullish phase given that the price has broken the weekly trendline following a triple bottom and the impulse has closed firmly above the $1,730 structure.

The price action has left a W-formation as follows:

This is a reversion pattern that would be expected to see the price correct back toward the neckline in due course. Having said that, the price has formed a number of lower time frame structures along the way that could serve as support:

Gold H4 chart

The above chart illustrates the resistance area that the price has been heading towards coupled with the micro trendline that was broken on Friday as a sign of deceleration in the trend. We could expect to see a phase of distribution over the coming days. The hourly chart will be worth keeping an eye on in this regard:

US Dollar meets support

The DXY dropped below a key level of support on Friday, extending the downside below the trendline. However, it would appear that the bears are now meeting support at the lower quarter of the 106 area which could serve as a foundation for a significant correction. A break of 108.00 opens the risk of a prolonged reversion up the Fibonacci scale towards 109.50.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

AUD/USD picks up bids above 0.7100 after RBA-speak

AUD/USD picks up bids above 0.7100 in the Asian session on Tuesday, following hawkish comments from RBA Assistant Governor Sarah Hunter and Governor Michele Bullock. However, escalating tensions in the Middle East and the Fed's hawkish outlook remain supportive of the bullish US Dollar undertone, which could limit the pair. The crucial Trump-Xi summit is later this week and remains in focus.

USD/JPY holds small gains near 157.50 as JPY intervention risks loom

USD/JPY posts modest gains while trading near 157.50 in the Asian session on Tuesday as intervention fears help limit losses for the Japanese Yen. However, the BoJ's dovish rate hike to a 31-year high keeps JPY bulls on the back foot. Meanwhile, the US Dollar retains a bullish undertone amid the Fed's hawkish outlook and escalating Middle East tensions, providing tailwinds for the pair.

Gold battles $4,300 amid hawkish Fed, Iran risks

Gold turns lower for the second consecutive day following a modest intraday uptick, challenging the $4,315 region, or a three-day low in the European session on Tuesday. The US Federal Reserve's hawkish outlook is seen as a key factor driving flows away from the non-yielding yellow metal.

Bitcoin pauses rally as profit-taking reaches yearly high

Bitcoin takes a breather, facing a pullback, trading below $85,500 on Tuesday after surging 6.7% the previous day. Strong institutional demand supports the bullish price action, with spot Bitcoin Exchange Traded Funds recording nearly $1 billion in inflows on Monday and Strategy adding 950 BTC to its treasury.

Energy and risk markets remain in the driver’s seat

US stock markets rallied up 2.26% (Nasdaq) yesterday with AI/tech names leading the advance. The Nasdaq even tested the all-time high reached early June. The likes of the S&P 500 and EuroStoxx50 recovered up to 1.5%. Positive risk vibes and lower energy prices supported consolidation on bond markets following the past month’s heavy losses. European yield curves bull steepened.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.