Weekly data: Oil and Gold price action after positive news for the Dollar

In the previous week after some very positive news for the dollar like a decreased trade deficit on the balance of trade, lowered unemployment rate and  better than expected NFP. This created some losses on the oil chart against a stronger dollar and is currently on the move to regain back those losses.

On the daily oil chart we see the price rebounding to the upside after finding support on the lower band of the Bollinger bands and is currently trading just above the 23.6% of the Fibonacci. This is an important area on the chart because its between the Fibonacci level and the 20 day moving average. If we see a valid break above this area then we might see some resistance around the $78 level which consists of the slower 50 day moving average and also just below the 38.2% of the Fibonacci.

Given that on the Stochastic indicator the %K which is presented by the blue line crossed above the %D (orange line) it is very likely to see the trend continuing up in the following sessions. If the price resumes the overall bearish movement then we might expect some support around the $70.50 level which is the last area of price reaction in early December.

Gold-dollar, daily

As the Dollar is slipping in recent sessions amidst signals of the FED slowing down their pace on the upcoming meeting on the 1st of February, gold is making extraordinary gains reaching a seven-month high. Similarly to gold , the reopening of the Chinese economy has helped boost the price of the “yellow metal” upwards. On the other hand,concerns that the outflow of Chinese tourism picking up may cause another surge in COVID infections and growing worries about a deeper global economic downturn could cap any optimism in the markets if this scenario is confirmed.

From the technical point of view we see the price breaking above the bullish wedge formation that was in effect for the last couple of months and currently “walking the line” as the saying goes when the price is trading on the Bollinger bands. This shows increased volatility in the gold market with the expanding Bollinger bands confirming this. The price is trading on a resistance level of price reaction since mid June 2022 which in combination with the upper band of the Bollinger bands make the current level a strong technical resistance area.

The Stochastic indicator is in the extreme overbought level and in addition to the technical resistance make the scenario of a correction to the downside very probable. If we observe a bearish movement in the following sessions we could possibly expect some support on the price around $1,825 which is just above the 78.6% of the daily Fibonacci retracement level and also the psychological support of the round number.

The post Weekly data: Oil and Gold price action after positive news for the Dollar appeared first on LeapRate.

gold