Morning outlook - XAU/USD approaches 100-day SMA
Previous trading week the exchange rate ended at the intersection of the 61.8% Fibonacci retracement level and the bottom boundary of two ascending channels and was ready to make a rebound. However, an unconfirmed victory of the Japan's PM Shinzo Abe and his party strengthened the Dollar and pushed the through this combined support barrier. This fact as well as Donald Trump’s intention to complete tax reform, after successful vote on budget in the Senate, indicates that the pair might continue to move in the southern direction towards the weekly S1 at 1,270.00. On the other hand, the fact that on daily chart the pair is facing the 100-day SMA suggests that the pair is likely to retreat for some while. Plus there is a need to take into account that market sentiment is 53% bullish.
Previous trading week the exchange rate ended at the intersection of the 61.8% Fibonacci retracement level and the bottom boundary of two ascending channels and was ready to make a rebound. However, an unconfirmed victory of the Japan's PM Shinzo Abe and his party strengthened the Dollar and pushed the through this combined support barrier. This fact as well as Donald Trump’s intention to complete tax reform, after successful vote on budget in the Senate, indicates that the pair might continue to move in the southern direction towards the weekly S1 at 1,270.00. On the other hand, the fact that on daily chart the pair is facing the 100-day SMA suggests that the pair is likely to retreat for some while. Plus there is a need to take into account that market sentiment is 53% bullish.
Comment:
XAU/USD trades in falling wedge
In result of the previous trading session, the exchange rate has finally made a breakout from the medium-term ascending channel. The plunge was caused by a rebound from the upper-trend line of the junior descending channel that was additionally backed up by the 100-hour SMA near 1,281.00.
In the meantime, narrowing fluctuations of the rate indicate that the above channel is gradually transforming into the falling wedge formation. If this is the case, then a combined support formed by the lower line of the pattern in conjunction with the weekly S1 at 1,269.58 is expected to neutralize the fall after release of information on the US purchase orders. There are similar expectations for the opposite direction, which should be reliably secured by the 55- and 100-hour SMAs that are slipping along the resistance line of the wedge.
In result of the previous trading session, the exchange rate has finally made a breakout from the medium-term ascending channel. The plunge was caused by a rebound from the upper-trend line of the junior descending channel that was additionally backed up by the 100-hour SMA near 1,281.00.
In the meantime, narrowing fluctuations of the rate indicate that the above channel is gradually transforming into the falling wedge formation. If this is the case, then a combined support formed by the lower line of the pattern in conjunction with the weekly S1 at 1,269.58 is expected to neutralize the fall after release of information on the US purchase orders. There are similar expectations for the opposite direction, which should be reliably secured by the 55- and 100-hour SMAs that are slipping along the resistance line of the wedge.
In regards to the short term outlook, the bullion’s price had approached the support of the proven 61.80% Fibonacci retracement level at the 1,279.05 level, where it seemed to have made a rebound.
Although, the metal still faced the 55 and 100-hour SMAs, which needed to be passed until the price surges back higher.