Gold concluded an amazing drop this week with a long bearish candle which was followed by another bearish engulfing candle which can be seen on the weekly chart. Yes, that was a technical play, which is suggesting a strong selling sentiment of investors. Learn more about candlestick trading strategies here.
Can We Expect $1199 This Week?
My opinion is, YES! Okay, let's me break down the key points in the favor of the bears.
– Evoking the concept that there is a negative correlation between U.S economic events and the safe haven asset, Gold. On Friday, the already bearish Gold got another reason to continue trading downside. Yes, this reason is the NFP which increased by 222K in the month of June, marginally beating the expectation of a 175K gain. Interestingly, the NFP figure for the month of May was upgraded from 138K to 152K. Yes, it seems like a positive NFP for 2 months in a row now.
Gold – Daily Chart – Double Bottom Breakout
– On the daily chart, gold has dropped below the double bottom support level of $1217 to extend its losses for $1207. But switching to the weekly chart, we see that $1207 isn't a very strong support. Therefore, $1199 seems achievable.
What Do We need To Achieve $1199?
Just a couple of positive fundamentals of the United States such as hawkish remarks on Yellen on Thursday and better than expected Inflation figures on Friday. Lastly, Gold has the potential to trade bearishly ahead of the release of these fundamentals over the market sentiment.
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