บทที่ 2 07/26 XAUUSD: Go Short at the Highs as the Bears Continue to Be on the Defensive
Abstract: The USD rose for the sixth consecutive trading day, depressing gold. However, this revised rebound highlights the internal strength of gold. Then, before the Federal Reserve's interest rate decision, will a drop of US$10 within the 1H frame disrupt the current market order?
Fundamentals
Last week, the price of gold fell by 1.2% to US$1,952, erasing the 18-day increase. However, the decline time is longer than the rise time, indicating that buyers are in a downward trend. It is worth noting that although the price of gold tends to fluctuate more, the U.S. Dollar Index (USDX) only rose by 1.7% in the same period.
Earlier this month, gold reversed its uptrend after retracing the 61.8% Fibonacci retracement of the rebound from last November's lows to the early May highs. When completed, the pattern offered an upside potential of US$2,370 (161.8% Fibonacci extended retracement of the initial move).
Just a week ago, the market rose steadily and broke through the 50-day SMA, confirming this long-term bullish sentiment. Despite the decline this week, the price of gold is still above this important curve, and it is still in a bullish trend (Long-term prospects).
Considering the prospect of further decline, it is necessary to observe its latest trend around US$1,947 and US$1,910. Breaking the former will bring the price of gold back below the 50-day moving average. And falling below US$1,910 will return the price to the previous low of US$1,892. Combined with the low local high since mid-July, this may form a downward trend and undermine the current bullish situation.
Fundamentals
After hitting a four-month low of US$1,892 at the end of June, gold prices recorded strong gains in July. Although gold prices experienced a sustained pullback after hitting a new two-month high of US$1,987 on July 20, the trend has been repetitive over the past four hours; the sharp recovery followed by a US$10 decline has left investors confused.
However, we are more bullish on the short-term uptrend. Momentum indicators support our bullish expectations. Specifically, the RSI is hovering above the neutral threshold of 50, while the MACD has turned positive after two consecutive days below the zero line. Considering that the price is trading above the upper Bollinger Band, investors should remain cautious in buying on the uptrend. We are more optimistic about the XAUUSD's sharp retracement after it rose sharply to the range of US$1,980 during the Fed's interest rate decision.
If the bullish pressure persists, the high of US$1,987 in the last two months may become the first resistance that bulls need to overcome. Breaking through this level, the last line of defense in the downward trend of US$1,993 will be tested. If this level falls, the medium-term bearish pattern will be broken.
On the other hand, bearish behavior could lead the price to initially test the 78.6% Fibonacci level at US$196, which is in line with the 500-period SMA. The next key support level is at US$1,945, below which attention will be focused on US$1,937. Moreover, the last line of defense for the bulls is US$1,923. Further collapse of this level will shift the focus below US$1,900.
Overall, the gold price has been consolidating around the 50-period SMA for the past five days after a sharp up-and-down move, which shows that the competition between the bulls and the bears is getting increasingly fierce. Any deviation from the direction will determine the change of direction. It is recommended to lay the foundation for future trading.
Trading Recommendations
Trading direction: Short
Entry price: 1980
Target price: 1860
Stop loss: 2005
Deadline: 2023-08-09 23:55:00
Support: 1963, 1952, 1948, 1945
Resistance: 1970, 1975, 1987, 1993
