Gold Price Futures (GC) Technical Analysis – July 18, 2017 Forecast
A weaker U.S. Dollar and lower U.S. Treasury yields are helping to support gold prices early Tuesday. Although the market is trading higher, buyers look a little tentative as gold inches its way through a major retracement zone.
Keep in mind that although the U.S. Dollar is falling and that theoretically, gold as a dollar-denominated asset is expected to rise because a cheaper dollar tends to increase foreign demand, gold is also sensitive to rising interest rates.
With the odds of a Fed rate hike later this year quickly diminishing, and the chances of a rate hike by the European Central Bank, on the heels of a Bank of Canada rate hike last week, slowly increasing, this gold rally may actually face some resistance.
Additionally, gold investors should continue to monitor the stock markets. Increased demand for higher risk assets also tends to weigh on gold prices.
The rally in gold has been nice for bullish investors, but in order to take this market to the next level, it’s going to have to get some help from a few outside markets, namely the stock indexes. If stocks weaken in the face of a good earnings season then gold may surge to the upside. If stocks rally then I think gold will have a hard time sustaining the current rally even if the dollar is weakening.
Technical Analysis
The main trend is down according to the daily swing chart. However, momentum has been trending higher since the $1204.00 bottom on July 10. The market needs to take out $1260.00 to change the main trend to up, but that doesn’t mean we can’t have a breakout to the upside leading up to this event.
The main range is $1260.00 to $1204.00. Gold is currently trading inside its retracement zone at $1232.00 to $1238.60.
The near-term view is easy. A sustained move over $1238.60 could lead to an eventual test of a major 50% level at $1251.40. A sustained move under $1232.00 could drive the market back to another major 50% level at $1216.00.
Forecast
Based on the current price at $1237.00, the direction of the market the rest of the session will be determined by trader reaction to $1238.60 and the downtrending angle at $1240.80. The angle is the trigger point for an acceleration to the upside with $1251.40 the next major target.
The inability to overcome the Fib level at $1238.60 will signal the presence of sellers. This could lead to a retest of the 50% level at $1232.00, followed closely by the uptrending angle at $1228.00.
This article was originally posted on FX Empire