Gold Creates This Bull Signal Ahead Of NFP
Fawad Razaqzada | May 08, 2020 04:13AM ET
Thanks to record low rates and QE, not to mention increased haven demand, gold has managed to retain most of its recent gains. And now it may have formed a key technical signal that it wants to break new 2020 highs.
Take a look at this daily chart of gold:
On Thursday, gold may have ended its recent consolidation phase as the market decided that it wants to go higher. The metal broke above the bear trend of the consolidation formation, creating in the process a large daily bullish engulfing candle.
The engulfing candle more than made up the losses from the day before, thus ending the short term bearish bias.
It is important that gold now holds above Wednesday’s high of ~$1708, which is the first key level of support now. If it doesn’t then the bulls may be in a spot of bother and would be in real trouble should gold go on to break below Thursday’s low at ~$1682.
But if gold does hold the breakout then the bulls may target the liquidity above the recent high of $1747/8 next, with the 127.2% Fibo at ~$1772 being the subsequent target.
The key risk is Friday’s US jobs report. In the event that the non-farm job losses are not as bad as indicated by the ADP (NASDAQ:ADP) and jobless claims data that we have seen in recent weeks, then that could help to support the dollar and undermine gold. But I doubt this would be the case.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.