4 potential gold market moves next week (technical analysis breakdown)
Hello, fellow traders!
Gold had quite the week. With inflation data coming in cooler than expected and the Fed dropping the bomb that no interest rate cuts are coming until at least September, spot gold has been on a wild ride.
We started the week at ~$2,300 per ounce. During mid-week trading, prices peaked at $2,331 but then dipped down to $2,295 before bouncing back. The week ended on a slightly higher note with gold hanging ~$2,332.
Let’s get down to some technical analysis to see what might be waiting for gold in the coming week.
📊 Let’s look at the data:
The colorful MA ribbons are a great visual for seeing trend direction and strength. When they're spread out and trending in one direction, that's a strong signal. But when they start to flatten or twist, it means a trend change might be on the horizon.
We kicked things off with an upward trend where the price steadily climbs, showing buying interest.
But around June 7, things get wild. The price spikes up, then quickly nosedives back down. This whipsaw action is classic indecision. The price enters a clear downtrend, dropping from 2,330 to around 2,290. The MAs are fanned out and pointing down, confirming the bearish sentiment.
Lately, we've seen a bit of a comeback. The price climbs back up, crosses above 2,330, and is now consolidating at 2,332.645. With this recent uptick and the MAs pointing up, we might see the price attempt to break above 2,335.
Keep an eye on that 2,335 level; it's a key resistance point. If the price can stay above 2,330 and break past 2,335 with some solid volume, we could see it push towards 2,340 and beyond.
Most of our indicators (CCI, ROC, and CMF) are pretty neutral, with a slight positive tilt. The market is currently in a wait-and-see mode.
Commodity Channel Index (CCI) is around 4.05 - a neutral value. It's been bouncing around lately, showing mixed signals.
The OBV is increasing, which is a good sign. Remember, volume usually leads the way, so if people keep trading more, the price might start moving up too.
During the last week, the ROC has been relatively flat, indicating a lack of strong momentum in either direction.
The CMF has been oscillating around the zero line, showing that there's no strong buying or selling pressure dominating the market.
Stochastic RSI (Stoch RSI) is currently showing values of 96.87 and 97.91, screaming that XAUUSD is seriously overbought. Over the past week, it has been bouncing between overbought and oversold, pointing to lots of volatility and quick reversals.
Relative Strength Index (RSI) is at 50.89, which is pretty neutral but leaning a bit towards the higher side. Throughout the chart, the RSI has hovered around the mid-range, with occasional jumps above 70 and dips below 30. This means the market has been getting a fair share of both buyers and sellers.
The CCI is sitting at 74.98, hinting at a slight bullish sentiment. Over the chart, we've seen the CCI spike above +100 and dip below -100 multiple times, showing frequent changes in momentum.
👀 What to expect next: 4 scenarios
1. Consolidation: Looking at the past few days, gold’s been jumping around between 2,290 and 2,335. With the RSI and Stochastic RSI showing overbought conditions, we might see some continued sideways movement. Expect prices to hover around 2,320 to 2,335 for a bit.
2. Pullback: Given that the Stoch RSI is super high, we might see a pullback soon. If the price drops below the support level at 2,320, it could head down to 2,310 or test the 2,300 mark.
3. Breakout: If gold manages to break through that resistance around 2,335, we could see it aim for higher levels. We’re talking about possibly reaching 2,350 or even 2,365 if this coincides with some unexpected global news (or a surprise Fed announcement).
4. Volatility Spike: With the OBV on the rise, there’s a good chance of increased trading activity. More volume often leads to bigger price swings. We could see rapid moves both up and down, making things exciting (and a bit nerve-wracking) for traders.
Here’s my personal take:
I think we'll kick off next week with some consolidation and not much movement in gold prices. The market's been overbought lately, and after such a run, it usually needs to catch its breath.
But keep your eyes peeled for a possible breakout, especially with the upcoming UK inflation data and interest rate decisions from both Australia and the UK. These events could stir things up and push the price out of its current range.
What do you think? Which scenario is most likely in your opinion?
Safe trading,
and remember: All that glitters is not gold,
Joe