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XAUUSD Technical Analysis


US Initial Jobless claims  

Initial Jobless Claims measure the number of people filing for unemployment insurance, its reported weekly.

Last week’s reading was 375,000, which was flat vs expected. The Dow Jones estimates for this week is a lower number at 360,000. 

To recap last month’s numbers: 

  • The total number dropped to 2.866 million up to the end of July; it’s the lowest level since March 2020. 
  • The numbers have been declining for three consecutive weeks
  • Four weekly average is sitting around 396,250

Another key indicator, the Nonfarm payroll report, reported 6 August, showed an increase of 943,000 jobs in July, better than the 870,000 forecasts. Furthermore, the unemployment rate for July decreased from a forecasted 5.7% to 5.4%.  The US dollar rallied against all major currencies as the news impacted it positively.

Jobless claims have been dropping significantly; the government extended unemployment benefits as part of the pandemic recovery and are starting to pull back. Inflation has been allowed to increase to bring jobs back to the level before last year’s lockdown. The unemployment rate has been a critical indicator for the  FED to start tapering; the latest data shows a positive employment rate.

In addition, an increase in jobs will help the Federal Reserve reduce bonds purchases starting in the fall.

 A higher-than-expected reading should be taken as negative/bearish for the USD, while a lower-than-expected reading should be taken as positive/bullish for the USD

Initial Jobless claims data is due Thursday 19 August, 14:30 GMT+2 

XAU/USD Technical Analysis For The Daily Time Frame

Average true range ( ATR)

As of the time of writing this market analysis, the total volatility of the market is seen on the bullish side; the investors and traders seem to wait for the effect on USD by the US Initial Jobless claims. The market will be very volatile and can change the overall direction of the US dollar, followed by XAU/USD.

Relative strength index (RSI)

The RSI indicator can still be seen in the middle of the overbought and oversold area. In June, the price line was seen hitting level 60, but as the market movement in the daily time frame now is on the bearish side, the RSI was seen touching the oversold zone at 40 in August. The main direction and the price trading will be dependent on the US Initial Jobless claims on Thursday.

Technical Analysis using Price Action:

Using the top-down multi time frame for technical analysis, Using daily followed by 4hr and 30min for rejection and trade execution.

The overall gold market has been bearish, meaning the prices were heading down. At the latest, you can see the price of XAU/USD in green and making a swing high- bullish move short-term. From April till mid-June, we could see gold price following the trend line, and then in Mid-June, there was a break in the trendline, making a downwards move.

The price was near the 1680, which is dynamic support, while the resistance zone is at 1900. These two prices at 1680 and 1900 are crucial to keeping in mind, as the price is keeping in between these prices. Moving forward, the prices tried moving up and breaking the resistance at 1831.49, but it could not do so after touching the zone twice; the price was the same way too down and touched the 1780 resistance zone. This sudden down movement was because of the price again in USD due to NFP on the previous Friday.

The buyers successfully broke the new high at 1795.45 and then made a new swing low at 1790.63. The market then again rallied to break the swing high but failed. The complete analysis at daily time frame seems Gold prices are still not on the bullish side. 

However, the primary technical analysis indicator that serves as the term in which a trading decision is made is based on the candlestick pattern noticed on the price chart. We can see a doji candle forming in 1720, indicating a short buy. Now we can wait for the price to either break the high at 1831.49 or the low at 1680.00 on an excellent trading setup. And to further have profitable trades in the coming weeks, a critical observation must be placed on the recent price pattern and the fundamental news effects on Thursday.

Potential pivot points using Price Action:

  • First resistance point is 1831.49
  • Second resistance point is 1914.74
  • First support point is 1759.16
  • Second support point is 1718.44

This marked resistance and support levels should be used as an entry or exit point trading motive when approaching the market in the future market openings.

XAU/USD Technical Analysis For The 4-Hour Time Frame

In the 4hr time frame, the price was seen holding between support zone 1914.74 and 1780. Price was able to break the previous swing low at 1759.16 and was seen moving up; moving forward, there was a swing low formed at around 1770. The best move right now for the traders in the short-term would be to wait for the break of either recent swing low or high with momentum at 1759.16 and 1831.49.

Finally, if the price breaks any of these levels, it can be a potential sell or buy signal. If you are someone who uses Indicators, you can match both the price action and the Indicator for better confirmation.

Key Trading Recommendation 

The US Initial Jobless claim is news that every trader and investor have their eyes on; waiting for the right move would always be the best risk management strategy. Although a large number of traders would not place their trades before the news, you too can consider doing the same.

Vantage does not represent or warrant that the material provided here is accurate, current, or complete, and therefore should not be relied upon as such. The information provided here, whether from a third party or not, is not to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any financial instruments; or to participate in any specific trading strategy. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. We advise any readers of this content to seek their own advice. Without the approval of Vantage, reproduction or redistribution of this information is not permitted.

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