Ticker tape by TradingView

July 28, 2021

XAU/USD Deep Dive: Powell Reassures Dovishness

Bart Kurek

We're still waiting for the market to complete the long-term bullish flag pattern on Gold, which has been built up since the start of March 2020. We've had the initial bullish run which pushed price towards all-time highs in September, and ever since we've been making a descending channel, and now waiting on a clear bull run once more.

Price is currently just above the channel's top after recently hitting and reversing off the bullish order block at around 1750. We're now waiting on some sort of catalyst to push price above the consolidation phase and higher towards the liquidity void at around 1900. Once we see this happen, we'll look for further signs of a potential break past all time highs.

1795 is a key horizontal level to look out for in the short-term, as we can see that over the past month, price has been indecisive around it. Currently, it's acting as strong support and we're just waiting on the consolidation phase to finish, until we can see another bullish run on Gold.

Looking at retail sentiment, Gold traders are primarily long on this pair, however, it's still quite mixed, as I consider 70%+ as a clear dominant winner. Looking at Gold long-term, there is a belief that central banks and the corrupted financial system created more paper gold claims than there is bullion to satisfy them. In other words, there is not enough gold to back all the paper claims on the yellow metal. When people finally realise what's going and the paper gold market collapses, the price of gold will skyrocket.

On Wednesday the 28th of July we had the FOMC Statement and Press Conference, where the FOMC left rates unchanged. The Fed now acknowledges that the "economy has made progress toward these goals, and the Committee will continue to assess progress in coming meetings" but the Fed does not appear to think that the ‘substantial further progress’ threshold has been met, noting that “the sectors most adversely affected by the pandemic have shown improvement but have not fully recovered".

There was definitely a more hawkish tone than expected on making progress towards their goals for tapering. The Fed is awaiting strong employment numbers before tapering. This suggests they're not too fussed with inflation currently, and instead, employment is now their primary concern.

Once we see better employment figures in the coming months, that is when the Fed will consider tapering. This dovish language we saw today is the reason we saw the USD sell off.

A1 Edgefinder

FLASH SALE
Take 40% off the Edge finder using code "READER"
GET ACCESS NOW

want to see what we're trading?

Join The VIP Community!
Our entries, exits & analysis
Live Webinar Coaching
Trading Chatrooms
Strategy Library 
Exclusive Trading Guides
Use Code "READER" for 10% OFF!
JOIN NOWJoin FREE Discord
A1 Trading Podcast
We Like These Pairs For Next Week

As this week comes to a close, we are looking ahead at future setups that could be some of the best opportunities for the next several trading sessions. Here are some pairs for next week that we are looking at. EUR/JPY Recent data has shown a slow down in the German manufacturing sector. With European […]

Read More
More Downside On The SPX500 After This?

When it comes to testimonies, it's all in how you say it. Jerome Powell has to be very particular in the way he makes his statements and answers the ensuing questions. Here is what might be in store for the market in the coming days and weeks, and whether or not there will be more […]

Read More
More Upside For Yen After This

The historically 'safe' currency to hold in times of recessions is in a unique situation now with a couple factors in place. Here is why the yen is stronger today as well as some trade setups that could push its value either up or down. Weaker Yen Now, Stronger Yen Later The Bank of Japan […]

Read More
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here
homescreensmartphone linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram