Two trades to watch: Gold, GBP/USD
Fiona Cincotta April 21, 2021 2:53 PM
Gold looks towards strong resistance at 1800. GBP/USD unfazed by weaker CPI data.
Gold looks towards strong resistance 1800
Gold rose on Tuesday boosted by tumbling US treasury yields and equities as surging covid cases globally brough a risk off mood to the market.
A dovish Fed is also helping the upside to the precious metal as the US central bank remain committed to its supportive policy.
Should yields continue their decline this could be supportive for gold. A lack of data means yields and sentiment will drive movement in gold.
Where next for Gold?
Gold is trading within a rising wedge pattern on the 4 hour chart.
The price trades above its upward sloping 20 & 50 EMA and the RSI is supportive of further upside.
Immediate resistance can be seen at 1789 the weekly high, a move beyond here could see the bulls aim for resistance a 1800, the round number and the upper band of the rising wedge. A break above 1815 could see the completion of a double bottom reversal pattern.
A close below the 20 EMA at 1772 could see more sellers come in. Strong support can be seen at 1759 the 50 EMA, the lower band of the rising edge and the low April 16.
GBP/USD unfazed by weaker CPI
UK CPI rises 0.7% YoY in March missing forecasts of 0.8%.
On a monthly basis UK CPI rises 0.3% in line with forecasts
Virus led pessimism dragged the pair sharply lower on Tuesday after 6 straight winning session. Global covid numbers rose by 12% over the past week.
BoE’s Andrew Bailey is due to speak at 10am GMT.
Where next for GBP/USD?
Yesterday’s sell saw GBP/USD find support on the 100 EMA at 1.3660 and rebounded higher pushing back over the 50 EMA and the ascending trendline which dates back to the mid-March 2020 low.
The RSI is in bullish territory suggesting that there could be more upside to this rebound.
The price is still testing this ascending trendline. If this holds then buyers could look to retake the 1.40 key psychological level and 1.41.
However, failure to remain above this key ascending trendline could see the price slip back to retest the 50 EMA at 1.3795 and the 100 EMA at 1.37.
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