Gold Technical Analysis

After some erratic price action following the US
data release on Friday, Gold found some footing as the buyers started to pile
in with more conviction after a key breakout and the US data setting aside the
inflation fears a little. Given the lack of data this week, we might see the
market continuing to trade based on the Friday’s numbers into the US CPI next
week.

Gold Technical Analysis –
Daily Timeframe

On the daily chart, we can see that gold recently
fell below a key trendline that was defining the bullish momentum that started
from the lows around the 2000 level. From a risk management perspective, the
buyers will have a much better risk to reward setup around the 2150 level where
there’s also another major trendline for confluence. The US data on Friday might have invalidated the
bigger correction for the time being, so the sellers will likely need to wait
for another catalyst to push the price lower.

Gold Technical Analysis – 1
hour Timeframe

On the 1 hour chart, we can see that the
price broke out of the downward trendline that was defining the short term
bearish trend. The buyers are starting to pile in with more conviction and a
break above the 2320 high should trigger a stronger rally into the 2352 swing
level. That’s where we will likely find the sellers defending the level and
stepping in with a defined risk just above it to position for a drop into new
lows. A break above that level should technically invalidate the bearish setup
and turn the short-term trend around.

Upcoming Catalysts

This week is pretty bare on the data front with just the
US Jobless Claims on Thursday and the University of Michigan Consumer Sentiment
survey on Friday being the only notable releases. It’s unlikely that they will
change the market’s expectations that much, so the price action might remain
tentative heading into the US CPI next week but with a slightly bullish bias.

This article was written by Giuseppe Dellamotta at www.forexlive.com.