January 26th Morning Brief
Dave Green • 2 min read
So are you excited to secure fresh trading opportunities?
Last night, the Gold plunged sharply below the $1200 (psychological level), as the stock market around the globe remained bullish. At the moment, the yellow metal trades at 1,198.15, adding only +0.35 points and +0.03% in the early Asian trading sessions.
The bearish trend is bullion, including the gold and silver, and is caused by the better corporate earnings reports. Besides that, the investor sentiment turned out to be more optimistic as the President, Donald Trump, provided more details on his policies. Not only that, he also signed two executive regulations on Tuesday to initiate the construction of the Keystone XL and Dakota Access oil pipelines.
Surprisingly, the stock markets of the major economies reacted to fundamentals and soared distinctly to trade at higher levels. For example, the Dow Jones Industrial Average (DJIA) managed to reach 20,000 points for the first time ever on Wednesday. S&P500 futures pinned on 5 points, or 0.2%. Nasdaq 100 futures scored 17 points, or 0.3%, whereas the DAX (German 30) jumped 1.12% on global optimism and favorable economic figures of the Eurozone.
Despite these gains, the Dollar index (DXY), a measure of the greenback’s strength, fell by 0.2% to 100.09, clearly indicating that the diminishing demand of bullion is prompted by the increased appeal of global indices rather than the weaker Dollar.
Now, let's share some insights about the technical view of Gold. Yesterday, it closed below a strong support and became a resistance level of $1205. Moreover, the 20 & 50 periods EMA's are also providing a resistance to Gold. Lastly, the RSI is holding below 50, supporting the bearish tone in the yellow metal. Based upon the analysis, I would recommend having a sell position only below $1205 & $1201, aiming at $1195 as an initial target.
Silver is also trading lower at $16.947, falling -0.033 points or -0.19% in the early trading sessions. The downtrend in the metal is caused by a boosted demand in the U.S equities and better corporate earnings. Furthermore, today investors will be monitoring the U.S unemployment claims for further clues about the market trend.
Technically, it's still consolidating below a $16.95, the 38.2% Fibonacci level. Moreover, the EMA's, both 20 & 50 periods, are pushing the silver lower. In my opinion, we can sell the Silver below $16.97, having a take profit at $16.88, whereas below $16.88, the silver may fall to target $16.83.
Good Luck, Happy Trading!