- XAU/USD has tumbled down as dollar demand triggers selling.
- The Confluence Detector is showing gold has critical support at $1,744.
- Gold Price Forecast: XAU/USD bears seize control as focus shifts to FOMC meeting
Fear has gripped markets – the Federal Reserve may still go ahead with tapering of its bond-buying scheme and China’s Evergrande is in deep financial trouble, The second-largest real-estate firm in the second-largest economy seems to be on the brink of missing a debt payment or even bankruptcy.
In turn, stock markets are under pressure and the safe-haven dollar is in demand. Moreover, US returns on 10-year Treasuries are on the rise, making yieldless gold less attractive. How is the precious metal positioned?
The Technical Confluences Detector is showing that XAU/USD has weak support at $1,746, which is the convergence of the Bollinger Band 4h-Lower and the previous day’s low.
The critical line in the sand for the yellow metal is $1,743, which is where the all-important Fibonacci 38.2% one-month hits the price.
Looking up, two resistance lines are eyed. First, $1,758 is the confluence of the Fibonacci 23.6% one-day, the Simple Moving Average 100-15m and the BB 1h-Middle.
The second line is $1,765, which is the meeting point of the Fibonacci 38.2% one day and the BB 1h-Upper.
Xau/usd forecast : New XAUUSD Trading Hours (effective from 26 March 2017)
|Instrument||Open (Sunday)*||Trading Hours (Weekdays)*|
|XAUUSD||23:01:00||23:01:00 – 21:59:00|
In the Forex market, gold is a form of currency. The internationally accepted code for gold is XAU which is a symbol used under the ISO 4217 currency standard to denote one troy ounce of gold. It is known to be a “safe-haven” asset, expected to increase its value in times of volatility and economic uncertainty.
The USD/JPY currency pair has traditionally had a close correlation with U.S. Treasuries. When interest rates head higher, Treasury bond prices go down, which lifts the U.S. dollar, strengthening USD/JPY prices.
A foreign exchange correlation is the connection between two currency pairs. There is a positive correlation when two pairs move in the same direction, a negative correlation when they move in opposite directions, and no correlation if the pairs move randomly with no detectable relationship.
You can trade on forex pair correlations by identifying which currency pairs have a positive or negative correlation to each other. In the conventional sense, you would open two of the same positions if the correlation was positive, or two opposing positions if the correlation was negative.
A good rule of thumb for traders new to the market is to focus on one or two currency pairs. Generally, traders will choose to trade the EUR/USD or USD/JPY because there is so much information and resources available about the underlying economies. Not surprisingly, these two pairs make up much of global daily volume.
The major currency pairs on the forex market are the EUR/USD, USD/JPY, GBP/USD, and USD/CHF. The four major currency pairs are some of the most actively traded pairs in the world, along with the so-called commodity currency pairs: USD/CAD, AUD/USD, and NZD/USD.
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News Source : Fxstreet