Bitcoin has stalled a little bit at the $66,000 level, which is an area that has been important previously.
With that being said, I think that if we can break above that level, then it’s possible that we could go looking to the $73,000 level.
This is an area that has recently seen a lot of resistance, so it does make sense that would end up being a bit of a target.
If we can break above there it would obviously say a lot of things, but right now it is going to be a market that simply looks at that as a potential possibility.
Short-term pullbacks should be buying opportunities
Short-term pullbacks should continue to be buying opportunities with the 50-day EMA below and the $60,000 level both offering support. Ultimately, I don’t have any interest in trying to short this market and I think that pullbacks continue to be buying opportunities. In fact, that’s exactly how I’m going to trade the BTC/USD market because I do believe that we have a range that is very much intact.
The support level at the $60,000 level is crucial, but you should keep in mind that it extends down to the $57,000 level. If we can break out to the outside and clear the $73,000 level, then I think Bitcoin has much further to go. Quite frankly, I think it’s probably only a matter of time before all that happens anyways.
But at this point in time, I like the idea of looking for a little bit of value and taking advantage of it. In general, this is a market that I think continues to see a lot of volatility. But as long as people are worried about the Federal Reserve loosening monetary policy decisions, and of course, cutting back a little bit on quantitative tightening through its balance sheet, it does make a certain amount of sense that Bitcoin will continue to try to go higher. As long as that’s the case, I think that there will be plenty of people out there willing to get involved in bitcoin still.
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Gold has pulled back from the crucial $2,400 level during trading on Thursday, which is an area that has been important multiple times.
With that being said, I think we are just simply entering some type of consolidation area more than anything else.
The $2,400 level above continues to be an area that I’ll be paying close attention to, and therefore, if we can break above there on a daily close, then I’m interested in getting long.
If we pull back from here, then the market could drop all the way down to the $2,300 level, which of course is a major support level based on the previous action. And now that the 50 day EMA is racing towards that level, it makes a lot of sense that traders will continue to look at that as a short term flaw in general, and I think this is a market that remains bullish. But you could make an argument for an attempt at least to form a little bit of a double top. A lot of this will come down to interest rates, especially in the United States. So, we’ll see how that goes. If interest rates start to really spike, that could work against gold.
Plenty of Buyers Overall
But at the same time, we do have central banks around the world buying gold. Hand over fist. Let’s not forget all of those massive geopolitical issues that are still out there waiting to cause headaches. So, with that being said, I don’t have any interest in shorting gold, at least not at the moment.
At this point in time, I look at a pullback as more likely than not going to be a buying opportunity in general. This is a market that I think continues to be very volatile, but that’s not really that new for gold, and as such, traders should be cautious about getting “too big” in this market. This is a positive market overall, but at this point, it is obvious that a certain amount of discretion is necessary when putting money to work, instead of just piling into this market.
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Silver is outperforming Gold, so traders should be more confident of being long of Silver than of Gold.
The best new trade opportunities which might set up today will be a long trade in Silver above the $28.80 area or in Gold from support at either $2355 or $2336.
Stock markets are mostly bullish, which is probably good news for further rises in Gold and Silver.
Gold (XAU/USD): Technical Analysis
The price chart below Gold is well established within a long-term bullish trend. Bulls still need caution as the price is not trading in blue sky and may still hit resistance. However, we have continued to see bullish price action over recent days, and the price is approaching and not far from the recent significant swing high at $2378.
A few hours ago, the price seems to have based off the support level at $2355.06. The price looks quite likely to rise higher and it could well reach or exceed $2378 today.
There will be a release of highly important US CPI data later today which will likely cause market volatility. If the CPI number is weak for the US Dollar, we can expect Gold to rise higher, and vice versa.
Key Support Levels:
$2355
$2336
Key Resistance Levels:
$2400
$2431
Silver (XAG/USD): Technical Analysis
The price chart below shows that Silver is well established within a long-term bullish trend. Recent hours have seen the price continue to rise bullishly and get very close to the recent swing high. It is notable that the price action here in Silver looks more bullish than what is happening in Gold, suggesting that a long trade today in Gold may work out better than one in Silver.
A problem for bulls is that we are starting to see signs that the bullish momentum is fading over the short term, as the price gets nearer to the $28.80 area.
A long trade here in Silver could be a great idea if we get a breakout beyond $28.80 with strong short-term momentum. This will probably not happen until after the US CPI data release.
Traders who prefer to buy at bounces on support after dips will likely struggle here because the nearest support level is quite a way lower, at $28.02.
Key Support Levels:
$28.02
$27.73
$27.47
$27.00
Key Resistance Levels:
$29.00
$29.80
$30.00
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The annual wholesale price inflation in Saudi Arabia edged down to 3.4% in April 2024 from 3.8% in the previous month.
Prices slowed for other transportable goods except metal products, machinery & equipment (8.1% vs 9.2% in March), while remained unchanged for food products, beverages, and tobacco & textiles (2.4% vs 2.4%) and agriculture & fishery products (0.2% vs 0.2%).
Additionally, costs dropped for metal products, machinery & equipment (-0.6% vs -0.7%) and ores & minerals (-2.2% vs -2.2%). On a monthly basis, wholesale prices decreased by 0.4% in April, after a 0.4% rise in March.
Saudi Arabia Wholesale Inflation Advances in March
The annual wholesale price inflation in Saudi Arabia advanced 3.8% in March 2024, up from 3.1% rise in the previous month, driven by a faster increase in the prices of other transportable goods except metal products, machinery & equipment (9.2% vs 7.5% in February).
At the same time, costs continued to rise for food products, beverages, and tobacco & textiles (2.4% vs 2%). In contrast, prices slowed for agriculture & fishery products (0.2% vs 0.6%), while declined further for ores & minerals (-2.2% vs -2%) and metal products, machinery & equipment (-0.7% vs -0.6%). On a monthly basis, wholesale prices rose 0.4% in March, rebounding from a 1.2% fall in the prior month
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Gold prices have declined to around $2,332 an ounce as of the start of trading this week.
This is as investor focus shifts to key US inflation reports due out this week to seek further clues about the Federal Reserve’s monetary direction amid mixed signals from Fed officials.
The US Producer Price Index is scheduled for release today, Tuesday, followed by the Consumer Price Index tomorrow, Wednesday.
After the weaker-than-expected US jobs report for April and the disappointing job report last week, expectations for US rate cuts this year have increased.
Markets expect the Fed to start easing monetary policy in September.
In recent months, gold prices have risen, driven by strong investment demand in the over-the-counter market, continued buying by global central banks, and increased demand from Asia. Escalating tensions in the Middle East also continue to support the safe-haven appeal of gold. In the latest development, Israel deployed tanks into eastern Jabalia in northern Gaza on Sunday after a night of heavy airstrikes and ground fire.
On the front of factors influencing the gold market, the 10-year US Treasury yield started the week’s trading below 4.5% as traders eagerly await the release of key economic data. The focus will be on CPI and PPI data, as well as retail sales and industrial production figures, to gauge inflation and economic strength. In the meantime, investors will be paying close attention to comments from various Fed officials for clues about when the Fed may start cutting rates, particularly Fed Chairman Powell’s appearance at the annual general meeting of the Association of Foreign Banks in Amsterdam today, Tuesday.
Overall, comments made by several policymakers last week indicated that rates would remain high for some time. Furthermore, the odds for Fed easing in September are currently 61% and 74% for November.
Another factor affecting the gold market is that the US dollar index fell to 105 on Monday as investors await key US inflation data this week which could impact Fed monetary policy expectations. Last week, the index ended with modest gains as Fed officials urged caution before cutting rates. In this regard, Fed Governor Michelle Bowman said she did not expect it would be appropriate to cut rates in 2024, while Dallas Fed President Lorie Logan said it was still too early to think about cutting rates.
Meanwhile, data on Friday pointed to a jump in consumer inflation expectations, although a sharp decline in US consumer confidence added to evidence that the economy is losing momentum. Also, markets are still pricing in September as the start of the easing cycle. Concurrently, investors are now looking to April inflation data to further guide interest rate expectations.
Gold Price Forecast and Analysis Today:
The decline in gold prices is natural, and the overall trend remains upward. The retracement may provide opportunities to buy again, and currently, the nearest support levels for gold are $2318 and $2285 per ounce, respectively. Conversely, on the same time frame, the daily chart below indicates that returning to the resistance area at $2375 is crucial for bullish movement towards the psychological resistance at $2400 per ounce once more. Evidently, gold prices may continue to move within narrow ranges until reacting to US inflation figures and statements from Federal Reserve policymakers led by Jerome Powell.
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Last week’s key takeaway was the souring of risk-on sentiment due to expectations in the USA of higher inflationary pressure over the short-term as well as US Consumer Sentiment data which came in at a six-month low. This souring did not come until the end of the week, and it is unclear how negative it is, as most assets over the entire week showed a risk-on rally.
It is unclear what sentiment will be like as the new week gets underway. It is likely that markets will be so fixated on the upcoming US CPI data release that nothing much will happen in the market before that.
The two major data releases last week were policy meetings at two central banks: the Bank of England and the Reserve Bank of Australia. Both central banks kept their interest rates unchanged, but the Bank of England vote was a little more dovish than expected. The RBA stated that inflation risk remains to the upside but that on balance they considered another rate holding to be the correct action. However, both banks effectively indicated a rate hike was out of the question.
Other important data releases were:
US 30-Year Bond Auction – this produced a slightly lower yield, which should be slightly bullish for risk.
UK GDP – this came in notably better than expected, with a month-on-month increase of 0.4% instead of the expected 0.1% increase.
US Unemployment Claims – this was slightly worse than expected.
Canadian Unemployment Rate – this was better than expected, with the unemployment rate remaining unchanged at 6.1% due t the creation of more net new jobs than was expected.
The Week Ahead: 13th – 17th May
The most important item over this coming week will be the release of US CPI (inflation) data on Wednesday. Apart from that, there are several other important releases scheduled, listed in order of likely importance:
US PPI
US Retail Sales
US Empire State Manufacturing Index
US Unemployment Claims
Australia Wage Price Index
New Zealand Inflation Expectations
UK Claimant Count Change
Australia Unemployment Rate
Monthly Forecast May 2024
Weekly Forecast 12th May 2024
Last week, I forecasted that the Japanese Yen would decline against the Euro, Pound, New Zealand Dollar, Swiss Franc, Canadian Dollar, and Australian Dollar. All of these were excellent winning trades, giving a large overall gain of 10.45%, as outlined earlier.
Directional volatility in the Forex market decreased last week, with 27% of the most important currency pairs fluctuating by more than 1% last week.
Last week, the Australian Dollar showed relative strength, and the Japanese Yen showed relative weakness.
Key Support/Resistance Levels for Popular Pairs
Technical Analysis
US Dollar Index
The US Dollar Index printed a small inside candlestick last week which closed slightly higher with a relatively large upper wick, signifying indecision. The candlestick is close to being a bearish pin bar. There is no true long-term trend here, as the price is above its level from 3 months ago but remains below its price of 6 months ago, making the US Dollar relatively unreliable to trade on a trend basis.
The weekly price chart below shows that the dollar has been swinging but has been in a consolidation pattern for quite a while, and the consolidation seems to be getting stronger and constricting.
However, it is worth noting that there is a confluence of a bearish descending trend line and a key horizontal resistance level at 105.81 which is not far from the current price. If the Us Dollar can get established above that level, it could be a significant bullish breakout. It could happen this week if the release of US CPI (inflation) data is notably higher than expected.
USD/JPY
The USD/JPY currency pair was active this week, as were all the Yen crosses. This is due to volatility remaining within the Japanese Yen after its recent massive price movements, with the volatility goosed by two suspected interventions from the Bank of Japan.
The Yen is weakening everywhere, and so of course it also weakened against the US Dollar. However, several other currencies gained even more against the Yen last week.
Technically we see the bullish momentum starting to evaporate into a consolidation below ¥156.00.
Yen weakness is quite likely to persist over the coming week. Whether this is the best pair to use to be short of the Yen is debatable. However, if the Yen does stay weak, long trades from bounces at support levels in this currency pair are likely to be good trades.
Gold
The price of Gold rose quite firmly last week, printing a bullish engulfing candlestick of good size, although Friday saw Gold give up some of its gains through a short-term topping out. The weekly price chart below shows some upper wick on the weekly candlestick. However, the price closed notably higher, and is not very far from making a record high weekly close, which was last made 4 weeks ago at $2392.
We do not yet have bullish breakout conditions, but long trades do look more likely to succeed than short ones, and there is certainly a long-term bullish trend here.
I think we could see a good point to enter a new long trade if we get either:
A daily close above $2400, or
A retracement to any of the support levels above $2290.
Silver
The price of Silver rose quite firmly last week, printing a bullish engulfing candlestick of good size, although Friday saw Silver give up some of its gains. The weekly price chart below shows some upper wick on the weekly candlestick. However, the price closed notably higher, and is not very far from making a record multi-year high weekly close, which was last made 4 weeks ago at $28.69.
We do not yet have bullish breakout conditions, but long trades do look more likely to succeed than short ones, and there is certainly a long-term bullish trend here.
I think we could see a good point to enter a new long trade if we get either:
A daily close above $29, or
A retracement to either of the support levels at $27.72 or $27.46, with $27.46 looking especially strong due to its confluence with $27.50.
S&P 500 Index
After major US equity indices dropped quite sharply 4 weeks ago after making new all-time highs, US stock markets have been rising slowly but surely, and last week saw quite good performances, especially here in the broad, benchmark S&P 500 Index. It is worth noting that this Index outperformed the NASDAQ 100 Index, which is unusual in a bear market and suggests that the tech sector currently has some vulnerability.
The weekly price chart below shows a bullish candlestick that closed quite near its high. There was some upper wick, but nothing unduly large for bulls to worry about.
There is clearly a long-term bullish trend coupled with mostly bullish short-term momentum. The issue for bulls here is likely to be that the price is near the recent record highs which could provide resistance and trigger another bearish reversal if reached.
For this reason, I will only consider entering a new long trade here if we see a new record high daily close. I prefer a daily close above 5265 which would be a new record high.
We have seen renewed risk-on sentiment in recent days, which is benefiting stocks and precious metals. Gold and silver are positively correlated with stock market performances historically.
USDMXN :
The US dollar gap lower against the Mexican peso the kickoff the trading week, only to turn around and show signs of strength and fill that gap, only to turn right back around and start selling off. Ultimately, this is a market that I think is doing everything he can to break down below the 16 pesos level, but we have a long way to go. In general, this will be an interesting pair to watch due to the fact that it is an emerging market currency that is extraordinarily important. I think this still remains a market that you are looking to fade rallies in.
CAC
The French index was very positive this week, although it’s worth noting that Friday was little bit of a letdown. The market has struggled at the previous high, but this simply means that we will probably pull back only to find more buyers. Underneath, we have the €7900 level that is likely to offer quite a bit of support. Even if we were to break down below there, I think there’s even more support near the €7600 level as the 50-Week EMA comes into the picture.
Bottom Line
I see the best trading opportunities this week as follows:
Long of the S&P 500 Index following a daily close above 5265.
Long of Gold following a daily close above $2400.
Long of Silver following a daily close above $29.00.
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Rehana William |Financial Consultant _Forex_Gold Xauusd| Fund Manager 