An unexpected move from the Bank of Japan
achieved. Possible resistance before potential move to 114 can be found 113.310 and 113.810.
At the same time, both the Stochastic Oscillator and RSI are each located inside the overbought boundaries. If US economic momentum slows down at all and encourages speculation the Fed will delay providing a timeframe for a rate increase, investors will become very tempted to close their positions on the Dollar. In the event this occurs, USDJPY support can be found at 112.240 and 111.540. a at
A combination of the Federal Reserve concluding QE and the US GDP being announced much higher than expected at 3.5% improved the US economic outlook last week. This in turn led to Gold finally extending below $1180, a move that shouldn’t be underestimated. Previously, the $1180 area had acted as a critical support level for Gold and on the past three occasions the commodity reached $1180, Gold reversed. This time, there was no reversal.
This should be seen as a crucial signal that perhaps the hedge funds were onto something when they highlighted as far back as in 2013 that 2014 would be the year Gold began a correction.
The upcoming week is heavy on US economic data, meaning volatility in the Gold markets may not be over quite yet. Another strong employment report at the end of the week would improve US economic optimism, and likely lead to increased pressure on the Fed to begin discussing a potential timeframe to raise rates.
In reference to my technical observations for Gold, both the Stochastic Oscillator and RSI appear to now be approaching the oversold boundaries.
However, the downside break below $1180 is a critical sign that the bears may now be in control of Gold’s direction. Further indications of the US economic outlook improving would encourage bearish moves to $1156 and $1146. At the same time, if US economic data disappoints this week, the previously critical $1180 support level will now become resistance.