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Technical Analysis – Charts of The Week

XAU/USD – Chart shows viable long positions within the Parallel upward channel and above the Major Pivot at $1780, to retest the Key Resistance at $1808 and after consolidation to break through the Resistance Zone at $1825 to $1833 Alternatively, if prices drop back below the Pivot, then short positions first target the Key Support at $1769 and then towards the Support Cluster between $1750 to $1740.

XAU/USD

  • Resistance Zone: $1825 to $1833
  • Key Resistance Level: $1808
  • Major Pivot Point: $1780
  • Key Support Level: $1769
  • Support Zone: $1750 to $1740
  • Last Analysis Date: Blue Vertical Lines
  • 200 Day EMA – Green Line
  • 50 Day EMA – Red Line

Trade Insights – XAU/USD – Chart shows viable long positions within the Parallel upward channel and above the Major Pivot at $1780, to retest the Key Resistance at $1808 and after consolidation to break through the Resistance Zone at $1825 to $1833

Alternatively, if prices drop back below the Pivot, then short positions first target the Key Support at $1769 and then towards the Support Cluster between $1750 to $1740.

XAU/USD Daily Chart

Chart Analysis:

Directional bias: 2 Weeks XAU/USD

XAU/USD Chart shows the pair is still trading between the Horizontal since the Mid-June this year. The daily chart shows that the pair has formed a bullish channel and moving higher towards the Resistance levels on the chart.  The prices are just hovering above the 50-Day EMA and the 200-day EMA lines indicating more Bullish Bias of the market. The pair need to stay above the Pivot point at $1780 and withing this upward channel for us to see a breakthrough the $1808 level. This is the actual resistance on the chart where prices even if they move higher towards the $1825 mark, they quickly retrace back under $1808 to stay around the $1800 psychological level. We have seen this pattern repeating itself about 4 times in past the 3 months. If the Support around the Pivot holds the prices, then would be longs could push the prices towards the peak around $1830 level.

Although, Gold is moving in the sideways pattern between the major Resistance and support zones on the chart between $1830 to $1750, the current price action is indicating an uptrend creating higher highs and higher lows on the chart. Any move above the $1830 and consolidation afterwards would mean a break away from the longer-term Downtrend that is dominating the gold prices since May this year.  

On the other hand, if support level of the current ascending channel on the chart is broken then after falling below the Pivot at $1808 could bring back the Support levels back in focus. The first support below the Pivot is at $1769 and then the support zone at $1750 to $1740.

Fundamental Overview: Gold works better as a long-term hedge against inflation and does not respond adequately to inflationary pressures in the short to medium term. Expecting gold prices to rise in line with the rising inflation could be a mistake for investors at this stage. Interest rate hikes by central banks globally would favour the higher interest yielding bonds in comparison to Gold as the opportunity cost to hold gold is higher as there are not interest returns on gold. On the economic front tomorrow, we will see ECB and BoJ provide updates on their respective monetary policy meetings regarding interest rates and stimulus measures.

EUR/USD

  • Resistance Zone: 118.80 to 119.00
  • Key Resistance Level: 117.50
  • Major Pivot Point: 118.40
  • Support Zone: 115.30 to 115.10
  • Last Analysis Date: Blue Vertical Lines
  • 200 Day EMA – Green Line
  • 50 Day EMA – Red Line

Trade Insights – EUR/USD – Chart shows viable long positions above the Major Pivot point at $116.20, targeting the key resistance at 117.50 and then after consolidation test of the resistance zone 118.80 to 119.00.

Alternatively, if the prices drop below the Support Zone 115.30 then short positions target the next support level at 114.00.

EUR/USD Daily Chart

Chart Analysis:

Directional bias: 2 Weeks EUR/USD

The Chart shows a Bearish channel formed by a multi-month downtrend that started to take shape in May and is continuing. The pair is trading just above the Support zone as we are heading into ECB and BOJ rate decision tomorrow. It seems that is Euro sitting at the inflection point just above the multiyear support zone around the 115 level. This could be the time to prepare for Long Positions and recovery to test the resistance levels on the chart.

Once the prices move back above the Pivot of 116.20 then Bulls can target the first major resistance level at 117.50 which is also the point where prices found resistance in September. A close above the key resistance could spark a full reversal to test the Resistance Zone at $118.80 to $119.00.

The pair is still trading well below the 200-day EMA line and just around the 50-Day EMA level that indicates the market could try to push prices to test the key resistance on the chart with the help of some positive news in the next few sessions. If prices continue to stay below the Major Pivot at $116.20 then the pair could drop below the major support level at 115.30. Once this key support is broken then prices slide further to touch the next support on the chart at 114.00 where EUR/USD might find strong demand. 

Fundamental Overview: European Central bank is taking a decision on interest rates tomorrow. And the FOMC will make a rate decision Next Wednesday just before our next analysis on Thursday next week. There could be a first announcement by Fed to start the actual tapering. The DXY or Dollar index is trading just above the 93.20 support turned previous resistance level and any move below this level can trigger a pullback in the Dollar index.

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Disclaimer

The information provided is of a general nature and is not intended to be personalised financial advice. The information provided is not intended to be a substitute for professional advice. You may seek appropriate personalised financial advice from a qualified professional to suit your individual circumstances.

Trading in Rockfort Markets derivative products may not be suitable for everyone as derivative products may be considered as high risk. Please ensure that you understand the risks involved. A Product Disclosure Statement can be obtained here and should be considered before trading with us.

Vishal R

October 28, 2021

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