Weaker Dollar, Weaker Gold – What’s Going On?
Arslan Butt • 2 min read
The precious metal Gold hasn't bothered to react despite the massive fluctuations in the market. It's been trading in the narrow trading range of $1290 – $1277 for the last four trading days.
Surprisingly, the Gold prices remain unchanged even after the U.S dollar's big decline. As we know, there is a strong negative correlation between the Gold and greenback. This means that for the bearish dollar, Gold was supposed to move higher rather than remaining neutral.
In my previous report on Gold, I discussed the ongoing uncertainties between the United States, North Korea, and Syria. However, the investor's focus seems to be diverted towards the onoging developments in the United Kingdom. As per the morning brief, the Sterling and the Euro are the major movers after U.K prime minister Theresa May proposed general elections in an unscheduled meeting.
Gold – Hourly Chart
Technical Outlook – Intraday
The technical side is very neutral and is giving us neither a buy nor sell signal. I opened a sell position in the Gold in the early Asian session but due to the lack of volatility, I had to close this position manually, only securing few pips profit.
In the hourly chart, the 50 periods EMA is keeping the Gold lower, below a strong resistance of $1286. The leading indicator RSI (below 50) is also holding in selling territory. The Gold has formed the tweezer top pattern in the daily timeframe, which represents that the numbers of buyers and sellers are almost same. Since this pattern is followed by a bullish trend, it has the potential to cover the upward trend to the bearish one.
Lastly, we can also find an upward trendline in the hourly timeframe which is supporting the metal at $1282. Breakage of the trend line will definetly open a new selling zone for the metal.
Forex Trading Signal
I recommend investors enter a sell position below $1286, with a stop loss above $1288 and a take profit of $1282. Next target level will be $1278.