Gold and oil slip as USD rockets
By Paul Reid
18 August 2023
The markets are showing signs of a sentiment shift. US500 is falling fast with a 5.2% decline this month. USTEC shows a similar trajectory, making US indices a precarious proposition right now.
Normally, investors would be shifting their wealth to haven assets such as gold, but XAU is also on a downward trajectory and digital currency prices just crashed in a single day. Even USOIL is falling. The money seems to be gravitating toward the greenback, catching traders and analysts off guard.
USD is strong against EUR, JPY, and CAD with notable rises in August.
This unexpected US optimism is leaving gold and oil traders uncertain. Will these trajectories last, or will there be a rebound?
From a technical point of view of XAUUSD, if the area of $1,900 (USD) proves a strong support level, then the first point of resistance could be around $1,914 and the second at $1,930. The price is trading well below the 20,50 and 100-day moving averages, while the Stochastic has been in the extreme oversold level for the last 10 days, indicating that a correction to the upside is due.
The price has been trading in an aggressive bullish rally for the last 2 months and shows signs of momentum cool-down in recent sessions. As the price makes a valid break below the $80 mark or the 23.6% of the daily Fibonacci retracement level, the next level of support could be at around the $77.80 area and the second at $75.80. Both of these support levels consist of Fibonacci retracement levels as well as the lower Bollinger bands and 50-day moving average respectively.
USD is flying, despite the additional $1 trillion printing plan on the horizon. Gold and oil are falling and, technically, expected to fall a little more. At this time, high leverage may be riskier than usual, and Stop Loss, Take Profit, and hedging are recommended.
This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.
Paul Reid is a financial journalist dedicated to uncovering hidden fundamental connections that can give traders an advantage. Focusing primarily on the stock market, Paul's instincts for identifying major company shifts is well established from following the financial markets for over a decade.
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