The Dollar has been trading sideways in a narrow range between $103.8 – $104.5. This has resulted in EUR/USD trading similarly, barely breaking out of the range it has followed for 2 weeks.
Gold was rejected by a key resistance level. The resistance is a level higher than the current price which pushes the asset back down. We saw gold test the resistance level at $1825 and get pushed down to $1807.
Gold is still within the range but we are seeing a bearish divergence in the asset which is shown on the chart with price action trending up and RSI trending down. Analysts are expecting a reversal for the commodity in the near term. A reversal in Gold is also dependent on a reversal in the Dollar.
We saw the Dollar fall for months but as it trades sideways now, we can expect it to reverse to the upside once a direction has been chosen. If we see the Dollar starting bulls then we would see EUR/USD start falling in a bearish trend.
In today’s DIFX Analytics, we’re going to look into the following assets:
The Dollar is trading sideways
The Dollar is hovering around the 50-day EMA but has yet to cross it convincingly. RSI is setting higher lows which signal there is momentum picking up in the Index. Traders are forecasting a reversal as we see consolidation followed by higher lows being set in the asset.
Even with price action trading low, RSI trading near neutrality is a positive indicator.
Bitcoin may see more declines
Bitcoin broke to the downside of the triangle yesterday. The digital asset is now sitting on the support at $16,600.
RSI has fallen to 33 on the 4-hour chart which is bearish. If the support is broken, we can expect further bearish moves in bitcoin toward the next support level.
EUR/USD is in a narrow range
EURUSD is still in a tight range between $1.0580 – $1.0660. Yesterday, we saw a brief cross above $1.0660 but price action retraced back down below into the range.
We are now approaching the bullish trend line and we may see the price break to the downside with a reversal in the Dollar.
Gold rejects $1825
Gold tested and rejected the resistance at 1825 – $1830 yesterday. We are now seeing bearish sentiment within the range.
Even with the price action setting higher highs, RSI is setting lower highs. This is a clear bearish divergence in the precious metal and a massive reversal signal. We would need a break below the range that has been formed to indicate the reversal is in play.
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DIFX shall not be responsible for any loss arising from any investment based on any recommendation, forecast, or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee, or implication by DIFX that the forecast information will eventuate, that clients will profit from the strategies herein, or that losses in connection therewith can or will be limited. Trades by the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses in particular if the conditions or assumptions used for the forecast or mentioned in the analysis do not eventuate as anticipated and the forecast is not realized.
