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Talking Points

  • FOMC prompts massive reversals in USD, Gold
  • USDOLLAR, XAUUSD testing March opening ranges
  • Key levels heading into next week

USDOLLAR Daily Chart

Forex-Key-Reversals-on-USDOLLAR-Gold-Post-FOMC--March-Range-at-Risk_body_USDOLLAR.png, Key Reversals on USDOLLAR, Gold Post FOMC- March Range at Risk

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • USDOLLAR responds to key Fibonacci support / monthly opening range low 10,497- 10508
  • Outside day reversal on FOMC- bullish
  • Near-term resistance at 10,595 (TL resistance & 38.2% Retracement)
  • Breach targets 10,626, 10,649/56 & 10,700
  • Support break targets 10,469, 10,441 & 10,379/86
  • Daily RSI resistance trigger pending
  • Key event risk next week: New Home Sales on Tuesday, Durable Goods Orders on Wednesday & 4Q GDP on Thursday

Notes: The greenback looks poised here post the FOMC policy meeting, with the index making a key outside-day reversal off four-month lows to close the session well above the weekly high. The rally has now taken the index into the March opening range high which comes just shy of a resistance confluence at 10,595. It’s important to note that we have not yet invalidated the monthly opening range and as such, while our immediate bias was shifted to the topside, we’ll remain prudent while below this level.

Bottom line: whether this reversal will materialize into a more substantial rally is too early to tell- but for now, our immediate focus is weighted to the topside while above the March low. Look for a definitive break/close above channel resistance dating back to the 2014 high for further conviction on long-side exposure into subsequent resistance objectives.

Gold Daily Chart

Forex-Key-Reversals-on-USDOLLAR-Gold-Post-FOMC--March-Range-at-Risk_body_GOLD.png, Key Reversals on USDOLLAR, Gold Post FOMC- March Range at Risk

Technical Outlook

  • Gold makes clean outside day reversal on Monday off multi-month highs- bearish
  • Breaks back below multi-year TL dating back to 2012- false break?
  • Support at March opening range low at $1325- (also November high)
  • Close below needed to validate near-term bias
  • Support objectives $1300-$1310, $1285 & 1268/70
  • Medium-term outlook bearish below $1354/57- bearish invalidation

Notes: A warning signal on Monday had us looking lower after bullion took out the monthly high at the 1.618% extension and reversed course to close the session below the Friday range. The move was accompanied by ongoing divergence in the daily RSI signature which further supported the decline. More significant, is the fact that the reversal has taken prices back below former trendline resistance dating back to the 2012 high.

Despite the decline into a fresh three-week low, gold has not yet offered a close below the March opening range and as such, we will remain prudent on short exposure above this threshold. Bottom line: we will favor selling rallies / breaks of support while below $1357 with a close below $1325 eyeing subsequent targets into more significant support at $1300. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

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