Research Report on Forex and Gold - August 21st 2013
Since the pair closed in a bullish path last week, so it continued to move upwards and gained around 100 points on Tuesday where it bounced back from its support level of 1.3321 and tested the resistance level at 1.3450.
Those who were selling on top were beaten badly by bulls yesterday as the bullish move was solely based on its technical points and as well as the speculation, where investors are expecting the FED members to hint towards lowering the quantity of bond buying in the FOMC meeting minutes due on Wednesday.
This type of move happens in the market when investors are speculating some decision and for this one, they may want to get a good selling price so they took the market up massively and may be shorting the pair after FOMC meeting minutes.
Currently the euro usd pair is trading at 1.3421 at the start of Asian session on Wednesday, where a sustainable move above 1.3450 could take the pair to test its next resistance level at 1.3472 and 1.3493. Since there is no fundamental due for Euro today so market may play slow until the start of the U.S session, where selling could be good option with tight stop loss set just above yesterday's high.
The British Pound has made a triple top just above 1.5655 resistance level where it failed to move above 1.5689 and is currently hovering at 1.5672 where a move above 1.5689 could show the next resistance levels that are clustered together at 1.5697 1.5710 and 1.5724.
The Industrial Order Expectations and Public sector net borrowing data is due today in the European session, where one sided results could cause good volatility in the pair. Sellers may take the pair to 1.5641 1.5625 and 1.5612 if it moves down below 1.5655. The support levels for the pair are clustered together that may hinder the bears to take over control, unless the FOMC meeting minutes come in favor of the U.S dollar.
As mentioned in our previous analysis reports that gold would test its next resistance levels at 1375 and 1380 if it manages to break and sustain above 1345, and so it did. Since it closed just above 1375 resistance level on Friday, it carried on its bullish move and tested its resistance level at 1380 but failed to sustain above it.
However, on Tuesday the metal gave its 50% Fibonacci retracement where it went down and bounced back from its support area at 1352 and is trading at 1371 in the Asian session on Wednesday. Traders must have to follow the technical levels as well while trading it during or after the FOMC meeting minutes, and no blind move could be taken as it could go in any direction.
Tapering of QE is taken as a negative action by the stock market and the U.S dollar would get stronger, so apparently it seems like gold would fall but it is also possible that the investors might diversify their portfolio and shift their investment from stock market to gold.
If gold breaks 1365 area, then it would re-test 1352, below which it could fall to 1346 1331 1318 support areas. On the upward side, a move above 1375 could take it to 1383 and 1403.