Yesterday, we mentioned three great setups with the USD: oil, gold and USD/JPY. On the first two, we were bullish and on the last one – bearish, supporting the negative outlook for the USD. Our analysis were spot on. oil and gold surged and USDJPY collapsed. The reason for that was different though. USD strengthened but our setups worked out due to the fact that the financial markets entered the risk off mode.
Killing the Iran General triggered the selloff of risky assets and the movement towards the safe heavens, like Gold, Yen or…Dollar. Oil went higher because the whole situation increases the tensions in the middle east and that is always bullish for this commodity.
Today I want to continue with the Gold as the price is approaching a crucial resistance. As You can see, the bullion is approaching the highs from the 2019. Once broken, Gold would be on the highest levels since the beginning of 2013! This area around 1560 USD/oz is absolutely crucial for this commodity. As you can see on the chart, that was a decisive support in 2011, 2012 and 2013. If someone would like to sell gold, that seems like a technical place to do so. That is a risky game though. The trend on Gold is ultra-bullish and I do not think that buyers will give up so easily. After the breakout of the 1560 USD/oz, the next stop is the 1800 USD/oz. Price, which a year ago seemed impossible.
Second instrument today is EURUSD, which did a very nice, technical drop. Here, like in Gold, we do have a perfect example that when, fundamental and technical analysis come together, results can be spectacular. On EURUSD, we do have a head and shoulders pattern, which in the same time is a false breakout of the 1.12 resistance. Traders had no choice here, the price dropped like a rock. The target for this movement is the mid-term up trendline connecting lows from October and November. Chance that we will get there are pretty high.