Wall Street Slumped On Black Monday; Will The Gold Shine Again?
AvaTrade | Oct 24, 2017 04:40AM ET
Summary:
- S. stocks began the week with losses while the gold rallied and went back above 1280 in risk aversion trading.
- The dollar index reacted off around 93.86 while found support on the 1 hour chart. It is interesting to watch whether or not the index could rebound again.
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The U.S. equity fell across the board on Monday 23 October while the gold rebounded thanks to the risk aversion. In addition, U.S. President Donald Trump told reporters he is “very, very close” to making his decision on who should chair the Federal Reserve and the candidates included Fed Governor Jerome Powell, Stanford University economist John Taylor and the current Fed Chair Janet Yellen. The dollar retreated against a basket of six majors to correct prior up move yesterday. Whether or not the greenback could hold above the H1-period trend support will be important to observe.
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Technical
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The dollar index (DXY) staged a corrective decline in a choppy trading after rebounding. Its short term moving averages went down to its long term moving averages which were still rising in the state of diverging and could offer supports to the index on the 1 hour chart. Whether or not its short term moving averages could turn higher and divergent will be important to watch.
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Switching gears to non-U.S. currencies now, the euro whipsawed repeatedly in Monday trading. With upside resistance still at H1-period trend line, the shared currency could potentially retreat in the short term. The British pound met resistance below H4-period EMA169 again. We may brace for the opportunity to put bearish bets if some bearish reversal candlestick patterns appeared. The Aussie dollar tested H1-period trend resistance twice, with little indication of bullish breakouts and potential extension of downtrend.
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As to precious metals, the gold rallied after the MACD formed bullish divergence configuration on the 4 hour chart. The prospect of breaking above its H4-period trend resistance, however, still looks gloom. If turned lower again, whether or not the decline in its short term moving averages could ease still remain to be seen. If only small retracements, the gold may potentially stage bullish breakouts. In addition, the yellow metal may move up as well on the potentially further increased in the risk aversion sentiment.
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Disclaimer: The views and opinions expressed in this article are those of the authors and for the purpose of reference only, and shall not be relied upon by investors in making any trading decisions.
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