GOLD - SELL - 4th January 2021




GOLD - SELL - 4th January 2021 (Open)


Good afternoon team,

Welcome to a new year on the Trading Floor, hopefully, we can kick start the year with a pretty big play here on gold.

This week there is a number of high impact data points coming out from the US that may result in a stronger DXY as the market begins to price in interest rate hikes mid-2022. The FED is expected to complete its bond tapering program over the next couple of months which is opening the doors for a number of potential rate hikes. Despite the surge in global covid infections, the economic outlook remains positive, the risk-on mood along with expectations for a faster monetary policy tightening from the FED is putting gold in a vulnerable position. First up the FOMC minutes early hours Thursday morning, followed by the NFP on Friday night.

DXY –  Daily Chart

The DXY failed to break the 95.60 support level, we were hoping for a larger corrective decline before the next move to the upside. It appears as though this will not take place, especially considering the economic data points coming out this week. The DXY has been rallying into the FED statements and US economic data. There was a pretty significant bounce yesterday which also suggests the market is not ready to fall.

GOLD – 4 Hour Chart

Firstly, the 1830 resistance appears to be a fairly crucial zone, we will need to keep our SL at this level. Looking at the possible triangle formation, it would indicate a move towards 1720-1700 is on the cards. If the FOMC minutes show the FED is ready to start raising interest rates gold could see a significant move to the downside. Based on the current structure, an Elliott wave triangle is possibly in play which is bearish in the short term.

Trade Setup: Sell market execution, current price 1805, stop loss 1831 and take profit target 1725.

Stop loss:  260 pips

Take profit: 800 pips

Trade Setup
SELL - Market Execution

Entry
1805

Take Profit
1725

Stop Loss
1831