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Gold Prices Enter Hot Spot Near $1260; Yen Pairs Look Bullish

Gold Prices Enter Hot Spot Near $1260; Yen Pairs Look Bullish

Jeremy Wagner, CEWA-M, Head of Education

This is a recording of a US Opening Bell webinar from May 1, 2017.

In today’s US Opening Bell webinar, we discussed technical patterns on key markets. Gold prices are in a hot spot right now. There is a pattern that implies a strong burst higher and an opposing pattern that suggests a break down. We previously anticipated the up trend and it is possible that trend may now break down. $1260 is the key level in that above, the bullish pattern is still alive. On a break below $1260, the door is open for additional losses to $1246.

Gold may provide a teaser as to how the US Dollar may perform. A strong move in gold prices could be indicative of a broader US Dollar move. For example, in EUR/USD we are showing a collective of wave relationships and a resistance trend line coming in near 1.10. My initial bias would be to see EUR/USD reject on the first visit near 1.10. The after math of such a move would indicate if 1.10 is vulnerable to break higher or a break down.

The Yen pairs appear poised to drive higher over the medium term (JPY weakness). USD/JPY and EUR/JPY are two markets we are looking for higher prices on even after a minor dip lower. We have highlighted EUR/JPY last week and the week prior. A break outside of their respective price channels is confirmation the mood of those markets are moving to the bullish side.

EUR/JPY sentiment has plummeted driving the EUR/JPY exchange rate higher. Over the past 2 weeks, sentiment has flipped from +2.8 to -2.3 now. Sentiment is a good contrarian type of signal in a strong trend. Do you want to learn more about trading with sentiment? Grab this guide.

Fed funds futures are hinting at a rate hike in the June 2017. Read page 2 of our quarterly Yen forecast to see how Japanese Yen behaved in the past during Fed rate hikes.

---Written by Jeremy Wagner, Head Trading Instructor, DailyFX EDU

Follow me on Twitter at @JWagnerFXTrader .

See Jeremy’s recent articles at his Bio Page.

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