Gold is approaching 2,000
Gold (XAU) price dropped to 1,965 on Monday, but later recovered due to falling U.S. Treasury yields. Over the past six trading sessions, XAU/USD has gained over 2% due to easing U.S. inflation, leading investors to expect the Federal Reserve to begin cutting interest rates in early 2024. The market is currently pricing in a 30% chance of a rate cut in March and a 50% probability of a 25-basis-point cut by May. However, investors may be overly optimistic about the end of U.S. monetary policy tightening, while the Fed may remain hawkish longer than expected. The market rose during Asian and early European trading sessions as the US Dollar Index and U.S. Treasury yields continued declining. Today, traders should focus on the Federal Open Market Committee (FOMC) minutes from the November meeting, which are expected to be quiet. Some analysts believe the minutes will be a non-event, as Jerome Powell made it clear that cuts will not be mentioned.
The S&P 500 E-Mini Bulls have formed three consecutive bull bars
The S&P 500 Emini Strong Bulls formed three consecutive bull bars closing near their highs, breaking far above the 20-week EMA and bear trend line on the weekly chart. They want a resumption of the bull trend, while the bears hope for a reversal from a lower high major trend reversal or a double top.
This week’s Emini candlestick was another consecutive bull bar closing near its high. The odds continue to slightly favor the market to trade at least a little higher and traders will see if the bulls can get another follow-through bull bar, closing above the bear trend line. The bulls see the move down (from July 27) as a deep pullback of the whole move up which started in October 2022. They got a reversal from a wedge bull flag (Aug 18, Oct 3, and Oct 27) and a trend channel line overshoot.
The current move-up is in a 4-bar bull microchannel with big bull bars closing near their highs, meaning strong bulls. If they get a couple of strong consecutive bull bars, the odds of the bull trend resuming will increase. If the market trades lower, they want a reversal up from a higher low major trend reversal and the 20-week EMA to act as support.
The bears saw the strong rally as a retest of the July 27 high and want a reversal from a lower high major trend reversal or a double top. Since this week’s candlestick is a bull bar closing near its high, it is a buy signal bar for next week.
The market may gap up on Monday, but small gaps usually close early. Odds continue to favor the market to still be in the sideways to up phase. Traders will see if the bulls can get another follow-through bull bar or will the market trade slightly higher but close as a doji or with a bear body. If the market trades slightly lower in the coming weeks, odds slightly favor the bulls to get at least a small second leg sideways to up.
USD/JPY surges following bullish Doji candle
USDJPY has surged after a bullish doji candle, indicating an upside reverse on the current trend in the short-term. Technical oscillators support the positive move, with the RSI ticking up in the negative region and stochastics posting a bullish crossover between the %K and %D lines. If bullish pressures persist, the price could revisit its recent resistance lines of the 50- and 20-day simple moving averages (SMAs) at 149.85 and 150.20, respectively. A jump above these lines and a return above the penetrated rising trend line could pave the way for the 13-month peak of 151.90. If bears attempt to push the price lower, initial declines could cease at the recent support of 147.10. Jumps above the short-term SMAs would confirm the upside structure in the medium-term outlook.
GBPUSD has surged to a new 2-month high
GBPUSD has reached a fresh 2-month high, surpassing the 200-day simple moving average (SMA) and the 1.2500 psychological mark. The pair has also reached its highest level of the last two months, with technical oscillators suggesting strengthening upside momentum. The RSI is above its 50 neutral mark and is approaching the overbought region, continuing the uptrend after it bottomed on September 27. The MACD is keeping its footing above its trigger line within the positive area, reflecting that buyers are still active.
If buyers stay in control, the door will open for the 1.2545 resistance level and the 50.0% Fibonacci retracement of the down leg from 1.3140 to 1.2035 at 1.2590. Running higher, the pair will face the 61.8% Fibonacci at 1.2720. If the bears press the price below the 38.2% Fibonacci of 1.2460 and the 200-day SMA, this may result in an aggressive downfall towards the 23.6% Fibonacci of 1.2300. If the latter gives away too, the decline could continue towards the bullish crossover between the 20- and 50-day SMAs at 1.2250.
Despite the recent exciting rally in GBPUSD, there are some obstacles to consider before a real bullish trend reversal takes place with regards to the medium-term outlook. The price is looking to resume its bullish trend as the price is creating the third consecutive green day, surpassing the 200-day SMA and the 1.2500 psychological mark.
