Week 51 technicals on XAUUSD and GBPUSD
By Antreas Themistokleous
21 December 2023
Two hot topics catching the attention of traders today are gold and British pound sterling.
Gold prices rose today due to a weaker dollar, as indicated by the Dollar Index (DXY), and lower Treasury yields. Traders are looking to this week's U.S. economic data for clues on the Federal Reserve's monetary policy outlook. Benchmark U.S. 10-year bond yields remained near a five-month low, around 3.87%, at the time this report was written, while the dollar was down against its rivals.
The focus is now on the U.S. GDP report, which is expected to increase, jobless claims data, which is also expected to slightly increase, and the November core PCE index report, where the market consensus is that it will remain stable at 0.2%.
From a technical standpoint, the price has found sufficient support around the $1,980 price area and has since traded with bullish momentum. The 50-day moving average is trading above the 100-day moving average, validating the bullish trend, while the Stochastic is approaching extreme overbought levels, which could possibly indicate a correction in the following sessions. If the bulls are proven to be stronger than the bears, then the first area of possible resistance might be seen around the $2,060 price area, which consists of 38.2% of the daily Fibonacci retracement level as well as the psychological resistance of the round number.
The dollar strengthened against other currencies as a late-session selloff on Wall Street increased its safe-haven appeal. The British pound fell sharply due to a lower-than-expected British inflation rate, which reached an annual 3.9% in October, marking a two-year low. The pound also faced pressure from expectations of a Bank of England rate cut. The rebound in the dollar was driven by doubts about the Federal Reserve's plans to cut rates sooner than expected and general optimism about the US economy.
From a technical perspective, the price is currently testing the support of the 20-day moving average and is also just above the technical support of 50% of the weekly Fibonacci retracement level. If the data set to be published later this week is bullish for the greenback, then we might witness some minor losses on the cable pair. If this happens and a shift to the downside becomes reality, then the first level of support might be found around $1.25, which consists of the psychological support of the round number, 38.2% of the weekly Fibonacci retracement level, the lower band of the Bollinger Bands, as well as the 50-day moving average area.
This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.
Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.