An un­ex­pected move from the Bank of Ja­pan

Financial Mirror (Cyprus) - - FRONT PAGE -

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.

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