Gold stuck in range after rebounding off 5-month lows; the risk is to the upside
Gold prices are firmer after rebounding off a 5-month low of 1236.49 last week but remain stuck in a range between 1250 and 1260 during the past few trading days. The flat RSI on the 4-hour chart is indicative of no clear direction in the market.
Risk though is tilted to the upside as prices are trading in the upper half of the Bollinger Band. Also, gold has crossed above the 50-period MA, strengthening the prospects for more upside in the near term.
But prices are nearing a resistance zone between 1259 and the 1261.82 high. A sustained move higher would open the way to target the key 1270 level, which would result in a shift to a bullish phase.
Caution is needed as the 50 and 200-period moving averages are bearishly aligned. Gold’s inability to break out of its current range and rally higher in the near-term may increase the risk of falling below 1250 with scope to re-test the 1236.49 low.
EUR/USD maintains neutral bias; capped below 50-day moving average
EUR/USD is neutral in a broad range between 1.1600 and 1.1900 since late September. The pair has been pivoting the 50-day moving average, which is horizontal and indicative of a lack of clear direction in the market. The RSI is neutral around 50.
Near-term support appears to be holding at 1.1730 and limiting downside moves. Below this level dips are expected to find strong support at 1.1600.
EUR/USD’s outlook remains positive in the longer term as the uptrend from April to September (1.0820 to 1.2091) has not shown any signs of reversal yet, while the 50 and 200-day moving averages are bullishly aligned.
The consolidation phase that followed the peak at 1.2091 is expected to continue in the near term until the market retraces more than half of the April-September uptrend. EUR/USD has only retraced 23.6% of this up-leg and is trading just below this Fibonacci at 1.1792.
The pair has scope to extend higher towards 1.1900 and to re-test the November 27 high of 1.1960. But near-term momentum is weak. Consequently, the neutral bias is expected to remain intact in the short term unless prices break above the 50-day MA.
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