Precious Metals – Weekly Technical Analysis, 16/09

Sep 16, 7:02 am

Gold futures have been trending lower this week after prices were seen briefly testing the weekly lows of 1102. Uncertainty of the Fed’s FOMC meeting outcome is likely to keep Gold futures trading in a tight range and could potentially signal a break out in the near term, which is expected to be during the FOMC meeting due tomorrow. Gold futures are down -0.26% at the time of writing with price trading sideways for the most part of this week.

On the H4- Chart time frame, Gold futures have been consolidating near the support level of 1103. Comparing the price action near the support level to the Stochastics oscillator, we can see a bullish divergence building at this level. The correction to the upside could see a rally that will retest the 1120 – 1125 support/resistance level off the lower support near 1103. This view is further reiterated by the falling trend line and the proximity of price to this trend line. A potential break off the falling trend line could likely trigger some buying in Gold towards 1120 in the short term.

XAUUSD – H4 Chart, 16/09/2015
XAUUSD – H4 Chart, 16/09/2015

On the daily chart time frame, Gold futures show the confluence of the minor support formed near 1098 – 1100 region and this support could potentially hold the declines ahead of a test to 1120/1125 region as noted from the H4 time frame. On the daily charts there are no conclusive candlestick patterns indicating the ranging price action likely to continue into tomorrow’s Fed’s meeting.

XAUUSD – Daily Chart, 16/09/2015
XAUUSD – Daily Chart, 16/09/2015

Silver futures continue to trend bearish with prices losing -1.38% at the time of writing for the week. The declines come after two weeks of consolidation on the weekly charts, where price action closed the past two weeks in two consecutive doji candlestick patterns. However, with price trading below the main level of 14.59, the bias remains to the downside.

XAGUSD – Weekly Chart, 16/09/15
XAGUSD – Weekly Chart, 16/09/15

Switching to the H4 chart time we notice that on the lower time frame, Silver futures currently pushing higher after forming a doji candlestick pattern near the support/resistance level of 14.5 region. A higher close on a bullish reversal at this support could potentially signal another leg in the rally towards the upside with the potential to move back as high as 14.85 resistance level. Alternatively, if price manages to hold below the support/resistance level, Silver futures could test the previous lower support at 14.11 region.

Looking forward, tomorrow’s FOMC interest rate decision will likely bring a lot of volatility to the markets including Gold and Silver futures. The market sentiment is finely divided with the futures markets implying a low probability for the Federal Reserve to hike rates at this meeting. However, there could be a possibility of a rate hike which could surprise the markets. Besides the Fed’s interest rate decision, the FOMC monetary policy will also include the staff economic projections besides the press conference as well, which is likely to bring a lot of volatility and noise to the markets.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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