Gold bounced back quickly on Monday morning after hitting a multi-day low of around 1802. Recent drop from $1959 to $1800 can be a third leg correction. Also, it took the support at its 50 weekly SMA $1800. First major support is near to $1764 level, below that 4th Wave correction could lead the prices to $1720 level. While on the higher side it might attempt to regain $1880.
In the last one year, $1800 has acted as the supply area multiple times.
After making a multi year low of around $89, Dollar Index is finally showing some strength in the last 2 weeks. It managed to close above $90 after the US President elect Joe Biden’s $1.9 trillion stimulus package. Higher Dollar Index is helping safe haven treasury yields to go up and other risky assets like Gold and Currencies to go down.
Technically, the Dollar Index might continue to strengthen further. On the higher side it might attempt to cross $92 to $93 area while on the downside the previous low of $89 might act as a strong support level.
Last week EUR/USD gave the highest correction in the last three months all thanks to higher Dollar Index and treasury yields. For a clear direction, all eyes will be on the event of the week; ECB’s meeting on Thursday- market’s expectation is unchanged policy.
Technically, 1.20 should provide a significant amount of support. Below that 1.93 is a weekly support zone. While on the higher side 1.23 is the resistance. If it manages to close above 1.23 level the next target will be 1.25 area.
Even after border closing with the UK, Cable is holding 1.35 level, this could be as the UK is all set to kick out the COVID vaccine drive from Monday. Technically, GBP/USD is on a weekly rising channel. Despite all the negative news, it is trading stable just below 1.36 level. It might march towards 1.40 level once it manages to cross the resistance area of 1.37. While on the downside, 1.32 is the strong support area.
US major index Dow Jones has been trading sideways since the beginning of 2021. Strong Dollar Index is weighting the equities along with other assets. President elect Biden’s stimulus package did not manage to give any positive effect on the equities.
Overall, Dow is trading on a rising channel, $30200 (50 days SMA) can act as a first support below that major support is at $29800. While on the higher side $31000-$31330 is the resistance area.
With the US Q4 results around the corner, 9% of S&P 500 companies are announcing their results in the coming week. Just before the earning season P/E ratio for S&P is trading at a 5 year high above the level 30.
Technically S&P 500 is trading in a rising channel. On the higher side, $3830 is the resistance area, if it manages to cross the level, it might attempt to touch the psychological level of $4000. While on the downside $3550 is the weekly support zone.
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