After three tops around the 1.3809 level the USD has gained momentum and is now pushing the pair to a bearish mode. Last week was interesting, when the pair closed below the 50 DMA and the 100 DMA, leading to this week’s action of a resistance to confirm the next leg down. Our targets to downside are 1.3413 (200 DMA) and 1.3295 however, a correction at 1.3551 (100 DMA) and 1.3624 (50 DMA) should stop the bulls.
|Support||1.3413 (200 DMA)||1.3295||1.3105|
|Resistance||1.3551 (100 DMA)||1.3622||1.3624 (50 DMA)|
Last week we analyzed this pair and along with its triangle formation on the 4H chart, today I would like to analyze it from the moving average approach. The daily M/A are around 171.2 (10 DMA blue line) and 168.25 (50 DMA green line) and on the 4H charts they look like two horizontal lines that will support and resist the price action. Until January 27, which is our expected breakout day (look at our analysis from 01/16/2014) the pair is expected to remain near those moving average and any breakout should present a good opportunity for a reversal trade.
According to our expectations from Thursday, the price action around the 10 DMA supported the gold with a clear close above the 50 DMA. As long as the Gold lingers above the 50 DMA we will view its price as a medium term correction mode. This means that the Gold’s main trend is still down but as long as the price holds above the 50 DMA the trend is up. On a daily basis we can see correction to 1245 (50 DMA) and 1242 (10 DMA) to the upside there are strong resistance at 1255 and 1275 (100 DMA)