Weekly recap – Gold is reaching for key support

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Traders love to buy dips and sell rallies, especially when we feel something is “overbought” or “oversold.” Gold is probably in the ‘oversold” camp as RSI remains in oversold territory and now at/near key support. We have been targeting (at Forex Analytix) the 1670 to complete and AB=CD or bear flag pattern. Now that we are about here, is it time to buy? Yields rallying while bonds drop globally is the risk for further losses, but I will be watching how the gold market responds at the 1641 161% Fibonacci golden ratio retracement should we get there.

NZDUSD on a 5 month trend line

The bearish argument for the NZDUSD has to be made at this level. First, the rally at the beginning of this week didn’t even allow for the Kiwi to break the 38% retracement of .7306 of the spike high to .7447 to the low of .7208. A shallow bounce means that the risk is for a move lower now. Another issue that the Kiwi has is that last week we may have put in a ‘false” breakout above the .7320 level and this week (thus far) we have not been able to break that level wither. Next, stocks (in the US) look weak and with risk appetite weighing the risk may be for the NZDUSD to follow lower and break the 5 month trend line. The 50dma is at .7210 and that is this week’s lows and multi month trend line. A break of this level should allow for a move back to .7100 and possibly lower.

Shanghai composite nearing some key support

One of the pillars of risk appetite globally has been the rally we have seen in equity markets around the world the last year. The Shanghai composite’s chart if a great representation of a strong rally since spring of last year. last week and today the composite is testing an ascending trend line near the 3500 level after coming off 52 week highs a couple weeks back with a divergent daily RSI reading. There is a “support zone” at the 50% retracement at 3462 and slightly below at 3442 which bulls should be watching carefully. The risk is a break of this trend line and the 50% retracement could lead to a deeper pullback towards the 200dma near 3300 and could put some pressure on other global market indices.

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