On Wednesday we looked at Gold which looked likely to break bellow support of $1285 and perhaps head lower. This key level provided a level of both support and resistance during much of January of this year. We returned to this level of support at the beginning of March and again near the end of March.
This level of support is still the floor of a head and shoulders pattern which may yet be broken.
As of this morning we have seen a rise to $1298, still well above the 200 day moving Average. On the daily chart we are seeing what could be considered a descending triangle but we will have to be patient to see if price increases to touch the upper trend line of the triangle. We saw a high of $1246 in mid-February and another attempt to the upside later in March to $1224 so we are definitely seeing lower highs.
Breaking below would see the next level of support at $1240 and the next major level at $1200.
During 2018 many central banks, large and small, were known to be buying gold for their reserves, keeping the bull run alive. We have just seen the PBOC increasing China’s reserves for the fourth month in a row making them the second largest buyer of the precious metal behind Russia. Even as trade negotiations with the United States are making progress, albeit slowly, there are signs that the Chinese economy may be faltering. The fundamental questions for gold are then, will we see more “safe haven” buying, and will we see a massive sell-off by central banks at the next levels of resistance.
Last Thursday we looked at AUDUSD which is still ranging between 0.7050 and 0.7150. We are still seeing a progression of lower highs starting from the 0.81 area January 2018, through to April 2018 at 0.78 where we saw the 200 day moving average as a line of resistance. We saw this again in December of last year and on the last day of January this year.
On the lower side we have seen solid support at 0.704 and 0.705, notwithstanding the flash-crash earlier this year, driven by the same phenomenon of the crash of the Yen.
On the fundamental side, the Australian economy is affected by the price of copper, which is down from its 2018 levels, and exports to China which, of course, is still negotiating trade arrangements with the US and may be seeing its own economy faltering. If these factors persist, the RBA may be forced to cut rates again which will drive AUDUSD lower.
On Friday we looked at Brent Crude or UK Oil and since then price has increased to over $70 per barrel after a weekend gap this morning. $70 proved to be strong resistance during January 2018 and again in March but broke above, with strength, in April 2018.
Of course, this bull run ended at over $86 at the end of October 2018 and the bears took over until the end of the year. Production cuts, trouble in Venezuela and other factors have created a a bull run during 2019.
Even though OPEC have said recently that they see no need for more production cuts, recent aggression in Libya, a serious producer of crude, has kept prices high.
EURUSD is still seeing strong support at 1.12 and is well down from its highs of 1.157 in January. Since then we have seen a progression of lower highs and an obvious downward channel to our current floor. We hadn’t seen prices at this key level since the consolidation of May-June 2017 and the next key level of support may occur at around 1.09 with room to move even lower.
On the fundamental side, analysts are saying that the ECB have run out of tricks but the lower Euro has helped exporters. However, confusion over Brexit, trouble in Italy and a rumour of a German recession will not help the Euro. Also, we may not see a rate rise until 2020 now.
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