XAU/USD – Major Level , Break Or Bounce ?

Let’s look at the almighty safe haven Gold. The precious metal is currently trading at 1610.50 at the time of writing the article. After seeing the massive selloff in gold as investors hurried to get cash on hand in fear of a recession and massive crash in the stock market , we saw the safe haven status come back to life with gold picking up steam off of 1450.00 and rallying towards a high of 1645.00.

4 HOUR TIMEFRAME

Since then we’ve seen a slowdown with price stabilising above the key level of 1600.00. Looking closely at the price action, we can see a higher high and higher low formation. The psychological level of 1600.00 will be a vital support level for gold to continue its rush into 1700.00 and an extended target of 1774.00. Should price break 1600.00 we can see a descent into the support level of 1563.00.

1 HOUR TIMEFRAME

Looking at the 1 hour timeframe, we can see the higher high, which we have also used as point 1 of our descending trend line. Price is currently forming a descending channel, as we trickle towards 1600.00. We also have an ascending trend line which has broken, retested and continued to the downside. 1600.00 would prove to be a pivotal point due to the fact that if price should break that level, we will break structure forming a lower low.

15 MINUTE TIMEFRAME

Looking at the 15 minute timeframe, the descending channel is more clear as well as we can see a break of support. As we make our way to the US session, we will be looking for a reversal/slowdown in & around 1600-1604.00 however, should price break and close below 1600.00 the long setup will be invalid and we will await further price action.

Looking at the fundamentals, we have major news for the US Dollar, so we could see a major flight into safe havens with consumer confidence, manufacturing PMI’s , crude oil inventories, jobless claims, the trade balance, AND NFP ! There is a boatload of fundamentals this week traders so trade safe and and remain patient for your setup in the markets.

GBP/AUD – A New Leg Into 2.03500 & Beyond ?

We’re starting on the 4 Hour timeframe today and we’re looking at GBPAUD. What we can notice first off is that we’ve printed a new higher high at the price of 2.03400. Since then we’ve seen a reversal and retracement back into the price regions of 1.98900 where we have a clear level of support. Price is forming higher highs and higher lows, trending back and forth as we look for liquidity to bring price into 2.06000 once again.

4 HOUR TIMEFRAME

We can also see a Doji currently forming on the 4 hour as well as 2 wick rejections. Should price pull back on the next candle open, we could anticipate a wick to be left into the downside and for price to accelerate into the highs leaving a 3 pin pattern. Looking closely at the formations, we have also formed a double bottom at our level labelled ‘ BASE SUPPORT LEVEL ‘ . We are expecting price to reach into the neckline and potentially even further.

15 MINUTE TIMEFRAME

Looking at the 15 minute timeframe we can see the double bottom more clearly. With the current counter trend line applied to the charts, we could see a break & retest, pushing price above the psychological key level of 2.00000. Should we see a break above this key level, we could find support before extending price into the highs. By breaking this level, we would also break structure and form a new higher high, signaling a reversal to the upside could be coming.

However, should price struggle below 2.00000, we could retest our support level, finding support around 1.99100, creating an inverse head & shoulder pattern. Upside targets are 2.03600 and 2.06400 respectively.

Now traders, lets take into account the fundamentals for the day ahead. GDP results have been released for QoQ ( quarter on quarter ) as well as YoY ( year over year ). We’ve seen the data fall inline with expectations have a QoQ data point of 0.0% and YoY data point of 1.1%. So we haven’t seen too negative of a result with the current pandemic and economic slowdown. Business investments came out a lot better than expected so we could see a flight into the Pound. There is no main news events today however we see Manufacturing PMI and House / Building approvals data coming out for the Aussie later this week.

As always traders, take care in handling your risk management and be aware of fundamentals, have a great week traders !

USD/JPY – Could We Be In For New Lows ?

Beginning on the monthly, we have a descending channel dating back to January 2017. As of February, we retested this descending trendline and again this month, leaving two wick rejections into the highs. Taking a look at the prior candle closures, we can see a slowdown and rejections into the highs, with Doji candlestick formations.

Let’s drop down to the weekly to get a clearer picture of price action.
On the weekly, the descending channel is more evident. We made a new lower low on the 9th of March with huge momentum seen as the FED Reserve Bank cut rates and quantitative easing measures were being exercised. We saw a pump into the upside where price then bumped its head on 111.500 as a psychological level.

Jumping down to the daily timeframe, we can see the majority of late February losses were made up, however, we began seeing resistance as soon as we crossed 111.200
If we plot a rectangle from the gap seen on the 24th February and extend it into the future, we can see multiple wick rejections into this level signaling buying pressure is weakening and bears are looking to take hold of the market.
The two dojiś formed beside each other signaled the reversal was near and we can drop down to the 4-hour timeframe to refine this viewpoint.

On the 4 HR we can see that 111.500 held firmly as a resistance level, over a five day period we saw 9 rejections off this level.
So once we established 111.500 as a resistance level and we had seen a slow down on the daily, we could look for reversal patterns on the 4HR. Coming into the US session, we saw a 3 pin pattern formation, which we could use as an execution point on the close. However, at AspireFX, we tend to refine our entry to the lower timeframes to catch high risk: reward trades. Drawing an ascending trendline we could also use the trend line break and retest as an entry.

1 HOUR EXECUTION EXAMPLE :

At the current time of writing this article, market price is at 108.000, the daily candle is rather indecisive and shows slowdown after a viscous bearish movement, seeing the dollar fall 350 pips on Thursday and Friday.

On a 4HR timeframe, we can see 107.500 held firm as a support level and we have seen a push, off that region with price closing above 108.000.
USDJPY may need relief before it´s next move so if the daily closes above 108.000, we could see a push back into 109.500 – 110.000 however, following in line with the current trend, if we close below 108.000 and find resistance, price will look to head into 106.000.

Taking note of fundamentals for the week we have Trump speaking tonight as well as CB consumer confidence tomorrow at 4:00 pm GMT+2. Wednesday we have non-farm employment change and manufacturing data to keep a look out for. Thursday we see unemployment claims and we then have the daunting NFP on Friday!

With all of these data points to look out for, the coronavirus pandemic and a huge stimulus package of $2 trillion, quantitative easing has been forced on the Fed. Can the Dollar recover or will we see major Dollar weakness ahead?

As always traders, keep risk management in line with your trading plan and for more updates, subscribe to our blog.