Death Cross Emerges in Gold Charts — FXPRIMUS

FXP_2020

Fxprimus Representative
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The sentiment among investors has not changed with asset prices continuing to push into new highs, except for gold, which has lost some of the gains in early 2021 and has moved to levels last seen in July 2020. On the opposite side of the story is the NZDUSD pair, which is generally seen as cycle sensitive and is currently near almost 3-year highs at the back of strong fundamental data. The dichotomy of the 2 assets is worth monitoring this week as they might offer a number of good entry points, as well as trading opportunities.

Gold (XAUUSD), after offering a generous return of 25.11% previous year, has lost 6% in 2021. The precious metal has recently lost its shine as global investors have been positioning towards faster than expected economic recovery. Gold, generally seen as a hedge during turbulent times, gains when economic and monetary situations are gloomy. Successful vaccine rollout in the U.K. and the U.S., along with strong economic recovery in China and Australia, have sparked a risk on sentiment that has forced XAUUSD on February 19 down to intraday low of 1,760.75. The last time gold traded at that level was in July 2020. Despite credit markets and asset prices signal increased inflation expectations, gold has remained stubbornly low and continues to trend lower. We saw Death Cross emerging on daily charts last week – an indicator that is considered as a warning sign of a bear market. Technical indicators signal a downward trend to continue but we expect a retracement to 1,820.00 levels in the coming week. Weekly chart reveals short- and medium-term bearish momentum that is also ripe for a retracement, while long-term trend is bullish with 200-period SMA near 1,455.20 levels.

Royal Bank of New Zealand is releasing their monetary policy statement and announcing a new interest rate decisionon Wednesday. Kiwi central bank has been keeping interest rate near 0.1% and is not expected to change the base level rate. New Zealand has been at the forefront in the fight against COVID-19 and has shown extremely impressive results with effectively eradicating the disease within the country. Bold restrictions during early days of the pandemic have allowed the country to re-open with almost no restrictions to businesses and movement of people. Fundamental data from New Zealand has been encouraging – business index recently spiked to 57.5 from 48.3 in December. Unemployment lowered to 4.9% from 5.3% in Q3 whilst the labor force participation rate was still 70.2%. Inflation expectations have been higher than in most developed world but still tamed near 1.89%. NZDUSD has been trading near swing highs and is currently attempting another move higher near 0.72920 levels. Should the announcement by RBNZ confirm the positive outlook on Kiwi dollar, we expect the bullish momentum to continue.

Equity markets showed signs of fatigue last week with S&P 500 losing 0.71%, Nasdaq-100 shedding 1.64% and Russell 2000 retreating 0.99%. US dollar, measured by DXY, was down 0.07% but attempted to break 50-day moving average resistance once again. Gold lost 2.20% while oil futures shed 0.35%.

In The Spotlight​

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*In USD millions

  • S. Durable Goods Orders – January
Measures the received cost of orders in manufacturing sector. Durable orders often demand a large outlay of capital at the onset, meaning they are sensitive to economic cycle. Higher than expected print is generally bullish for USD, while lower than expected is bearish.
  • S. GDP growth – Q4
GDP data shows the monetary value of all the goods and services produced in the U.S. A negative number indicates a contraction of economic activity while a positive number shows an expansion. A better than expected GDP growth is generally positive for USD, whilst a print below expectations tends to be negative.

Market Sentiment​

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EURUSD
EURUSD has been consolidating and currently sitting above 8-, 21- and 34-day exponential moving average, while 50-day EMA is still above the price. Short-term momentum indicators are roped and do not signal clearly the potential price action but price is likely to move higher from current 1.21220 levels. Resistance levels have formed near 1.21280 and 1.21380, while support is near 1.21060 and 1.20900. RSI of 48.62 and Stochastics of 30.7 are both neutral, while ADX of 16.9, DMI- of 18.9 and DMI+ of 17.5 do not give a quality signal.

Resistance: 1.21280
Support: 1.21060

GBPUSD
The pair moved to swing highs once again, trading now near 1.39945, after a brief break of 1.40000 levels. GBPUSD is still being carried by positive short-and long-term momentum. RSI and Stochastics, however, are not overbought and respectively at 71.11 and 88.8 levels. ADX is 17.9 and not giving a quality signal, while DMI+ of 27.9 dominates DMI- of 12.3 and signaling bullish momentum.

Resistance: 1.40500
Support: 1.39850

NZDUSD
NZDUSD pair has taken a step higher and broken upper Bollinger Band resistance level near 0.72800. Price is now trading above Bollinger Bands. Short- and long-term momentum indicators are all stacked in a bullish fashion, supporting trend continuation. RSI of 61.2 and Stochastic of 64.8 are both neutral. ADX of 13.5 gives no signal but DMI+ of 36.9 dominating over DMI- of 14.8 indicates a bullish momentum.

Resistance: 0.72915
Support: 0.72800

XAUUSD
XAUUSD is in bearish trend with death cross emerging on the daily charts. Short- and long-term momentum indicators are bearish and signal continuous downward momentum. RSI of 40.0 is neutral while Stochastic of 13.8 is overbought. ADX of 27.6 signals moderate energy in the trend, while DMI- of 31.4 dominating over DMI+ of 13.2 signals bullish momentum.

Resistance: 1,797.95
Support: 1,776.43
 
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