The NFP report on Friday
despite missing slightly expectations for the first time after 14 consecutive
beats, didn’t change the market’s expectations about the next 25 bps rate hike
as the other parts in the report were still solid with average hourly earnings
even ticking higher. Now the market is focused on the US CPI report on
Wednesday and that might change the pricing and thus lead to some big moves in
Gold.

Gold Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Gold got stuck
in range between the 61.8% Fibonacci retracement level
and the 1934 resistance level
where we can also find the red 21 moving average for confluence. The
bias remains bearish as the Fed is still seen hiking interest rates two or more
times this year if we don’t see a deterioration in the economic data. In case
we see a break to the downside, the sellers will target the 1805 level, while a
break to the upside is likely to lead to a rally into the 1984 resistance first
and then the 2076 high.

Gold Technical Analysis – 4
hour Timeframe

On the 4 hour chart, we can see that the price
recently broke out of the trendline that was
defining the bearish trend. Now the buyers will need to break above the 1934
resistance to get back control and target the 1984 resistance. The sellers, on
the other hand, are likely to lean on that resistance to position for more
downside and target the break below the 61.8% Fibonacci retracement level to
extend the fall into the 1805 level.

Gold Technical Analysis – 1
hour Timeframe

On the 1 hour chart, we can see more
closely the choppy price action of the last few weeks as the market is uncertain
on the next path for interest rates. The US CPI report on Wednesday will
probably decide where the market will go for the following weeks, but the
levels are clear:

• A break above the 1934 resistance is
  likely to cause a rally into the 1984 resistance.
• A break below the 61.8% Fibonacci
  retracement level should see the sellers taking the price towards the 1805
  level.

Upcoming Events

This week will
be all about the US CPI report on Wednesday. A miss to the expected numbers,
especially on the core side, should lead to a rally in Gold as the market will
price out the hawkish expectations and even bring forward rate cuts bets. On
the other hand, a beat to the forecasts is likely to cause a more hawkish
repricing in the expectations and lead to more downside for Gold. After the CPI
report we will see the US Jobless Claims on Thursday and the University of
Michigan Consumer Sentiment on Friday.

This article was written by FL Contributors at www.forexlive.com.

Last Friday the US NFP report missed expectations for the first time
after 14 consecutive beats. The miss was very slight though and the other
details in the report were good, so in the end it showed that the labour market
is still solid even though there may be some minor softening. The market
rallied initially but eventually sold off into the close as the US CPI started
to be the next focus. The jobs data on Friday hasn’t changed the market pricing
for the upcoming FOMC meeting as the market still expects the Fed to hike by 25
bps. The data on Wednesday will decide the next big move for the market.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones
couldn’t sustain the breakout above the 34477 resistance again
and eventually sold off into a previous support. The price has also fell below
the red 21 moving average and the
moving averages have crossed to the downside. This is a bearish signal, and the
target should now be the support at 32684.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price is
now at the previous support level at 33885 where we can expect at least a
bounce into the red 21 moving average where the sellers are going to step in
again. If the price keeps falling below the support though, the sellers should
pile in even more aggressively as the bearish momentum would be high at that
point and lead to a selloff into the 33448 support where we can also find the
61.8% Fibonacci retracement level.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
price is now diverging with
the MACD right
at the support level. This is generally a sign of weakening momentum often
followed by pullbacks or reversals. In this case, if we get a pullback, the
price is likely to rally towards the previous swing high level at 34200 where
we can also find the 38.2% Fibonacci retracement level for confluence.

That’s where we can expect the sellers
piling in to position for more downside with a defined risk above the
resistance zone. The buyers, on the other hand, can either enter here at the
support level with a defined risk below the support or wait for the price to
take out the swing high level to pile in and extend the rally towards the
previous high at 34700.

Upcoming Events

This week
everyone will be focused on the US CPI report scheduled for Wednesday as it
will likely decide the next big move for the market. A miss in the data,
especially on the core figures, should lead to a rally in the Dow Jones, while
a beat should weigh on risk sentiment and bring the market even lower. After
Wednesday, we will have the US Jobless Claims report on Thursday and the
University of Michigan Consumer Sentiment survey on Friday.

This article was written by FL Contributors at www.forexlive.com.