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Price & Time: Gold Slumps to 5-Year Low

Price & Time: Gold Slumps to 5-Year Low

Kristian Kerr, Sr. Currency Strategist

Talking Points

  • USD/JPY approaches key pivot area
  • GBP/USD stalls again at internal trendline
  • XAU/USD nearing “value” zone?

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: USD/JPY

Price & Time: Gold Slumps to 5-Year Low

ChartPrepared by Kristian Kerr

  • USD/JPY continues to grind higher to trade at its highest level in almost a month
  • Our near-term trend bias is higher in the exchange rate while above 122.40
  • The mid-June high around 124.40 and the 78.6% retracement of June – July decline at 124.70 represent the next big hurdle for the exchange rate
  • A very minor turn window is eyed mid-week
  • A close under 122.40 would turn us negative again on USD/JPY

USD/JPY Strategy: Like the long side while over 122.40

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

USD/JPY

*122.40

123.20

124.25

*124.40

124.70

Price & Time Analysis: GBP/USD

Price & Time: Gold Slumps to 5-Year Low

ChartPrepared by Kristian Kerr

  • GBP/USD stalled last week at the internal trendline connecting the April/June lows
  • Our near-term trend bias is lower in Cable while below 1.5700
  • A move under 1.5485 is needed to re-instill some downside momentum into the exchange rate
  • A very minor turn window is eyed mid-week
  • A daily close over 1.5700 would turn us positive on the pound

GBP/USD Strategy: Like the short side while below 1.5700.

Instrument

Support 2

Support 1

Spot

Resistance 1

Resistance 2

GBP/USD

*1.5485

1.5550

1.5570

*1.5700

1.5730

Focus Chart of the Day: GOLD (Weekly)

Price & Time: Gold Slumps to 5-Year Low

“Economic history is a never-ending series of episodes based on falsehoods and lies, not truths. It represents the path to big money. The object is to recognize the trend whose premise is false, ride that trend, and step off before it is discredited.”

– George Soros

XAU/USD fell to a 5-year low today. I have said it before and I will say it again. I view gold as a form of CDS against some of the unproven (and potentially dangerous) monetary experiments being conducted by the worlds central banks. With the S&P 500 just off all-time highs and the Federal Reserve supposedly contemplating a move to policy normalization (taper tantrum was almost two years ago now) it is not that surprising to see gold doing what is doing. The markets as a whole want to believe in the (perceived) omnipotence of central banks. But to be fair what other choice do they have? The smackdown in gold is clearly just a natural extension of the bullet proof central bank trade. If my Austrian view of the world is correct then this thinking should soon be proven false. Soon being relative (think quarters and years not days). Under $1000 an ounce XAU/USD starts to look attractive again, but arguably XAU/EUR and XAU/JPY are much more important instruments to watch.

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--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

This publication attempts to further explore the concept that mass movements of human psychology, as represented by the financial markets, are subject to the mathematical laws of nature and through the use of various geometric, arithmetic, statistical and cyclical techniques a better understanding of markets and their corresponding movements can be achieved.

To contact Kristian, e-mail instructor@dailyfx.com. Follow me on Twitter @KKerrFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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