18.06.21 Technical analysis XAU / USD (gold) – yellow metal has sunk, is there still a chance to reverse?
3 min read
Wednesday’s economic projections of the Federal Reserve had fatal consequences for gold (XAU / USD). It is indeed completely irrelevant whether we believe said projection or not. The market has made it clear to us that it takes the figures presented by the Fed seriously. Then, logically, it doesn’t really matter what we think about it.
In a previous analysis of gold, we showed that there was actually only one bad signal. Otherwise, overall, the market was technically quite bullish, and especially rising inflation provided the necessary fundamental level. Well, in the end, unfortunately, it was useless. However, I would like to point out that there is nothing static in the financial markets. The situation can easily turn dramatically in favor of precious metal.
Current situation at 1D TF XAU / USD (gold)
As for the daily chart, the situation is deteriorating significantly, as it turned out on Monday. On the one hand, the market broke the plotted trend, and on the other hand, the attack on the bottom wall of the plotted trading zone was too aggressive. The exchange rate consolidated noticeably on Tuesday just above the lower limit of the band and there was not much effort to bounce.
It was simply quite suspicious, but technically the yellow metal still created our fourth market equilibrium in a row, which was to be followed by an attempt to break the resistance of 1,950 USD / ounce. However, gold spilled on Wednesday and even the level of USD 1,830 / ounce was not able to slow down the decline in any way. The course passed the said level as butter knife which was crazy.
On Thursday, the S / R level of USD 1,830 was quickly tested from below, and then the yellow metal immediately continued to descend, accompanied by massive volumes. We stopped at another strong level of 1,770 USD / ounce. From the graph we can observe that in the early morning there was an effort to bounce back. However, on Friday afternoon, the price in an instant knocked back to support.
Friday candles are very bearish, so a new avalanche of sales may come on Monday. Then it’s our turn Double bottom level at S / R level 1,678 USD / ounce. I would venture to say that this limit will not just fall, and at the same time the test result will be absolutely crucial. If the support falls, gold will return in price to the first quarter of 2020.
Indicators
The RSI values have fallen below the threshold of 30 points and we are now staying around 28 points – and there is still not much will to bounce back, the market is really quite weak. Based on the MACD, the negative momentum is full of strength and is not weakening at all.
In conclusion
If sellers do not reduce their pressure, threatens breaking the current support and then can easily be followed by the continuation of free fall. This would, of course, erase the price gains the market has made in more than three months in just a few days.
But as I said, there is a chance of a reversal. But it certainly won’t come right away, because the Federal Reserve’s economic projection is too fresh. However, if macroeconomic data multiplies in the coming months, which is contrary to what the Fed estimates, then the market may take a different turn. But something like this can really take months, unfortunately.
ATTENTION: No data in the article is an investment board. Before you invest, do your own research and analysis, you always trade only at your own risk. Cryptheory team strongly recommends individual risk considerations!
