Intraday Market Analysis: XAU/USD and GBPUSD December 2017

Gold Intraday Strategy

In the past several months gold (XAU/USD) was held in a range and is still lacking a firm long-term direction. It is important to note that as we near the end of 2017 market conditions may become thinner, which could potentially trigger unusual price movements in the market.

XAU/USD 4hr Chart

Please click on the chart to enlarge:

XAU/USD 4hr Chart 17/12/17

XAU/USD painted a classic reversed Head-And-Shoulders (H&S) pattern on the 4hr chart. We added the 15 Moving Average (MA, in orange) as a potential support as further tests are required to ensure a firm supported is provided by the MA. A break above the neckline (upper diagonal line, in purple) is required to affirm further gains in the commodity.

We marked 2 targets for the reversal pattern on the chart, we should highlight that 1,260 to be the most appropriate. The latter support is seen at 1,250. In an event gold gaps above the neckline at the opening of the markets we do not constitute it as a valid breakout, will negate our strategy.

GBPUSD Intraday Strategy

GBPUSD trend has been mainly driven by the brexit negotiations as The Bank of England (BOE) affirmed minor hikes are expected within the next several years. The second phase of the brexit negotiations over a trade deal is expected to be more difficult according to EU officials.

Please click on the chart to enlarge:

GBPUSD 4hr Chart 17/12/17

We have some indications GBPUSD weakness is nearing its end. Based on the daily chart we noted the risk for a dip anywhere between 1.3215 – 1.3300 before correcting higher. Via the 4hr chart we may be able to further narrow the range.

We would like to see a dip towards 1.3270 (approximate region of the latter support, in purple), which if holds on the first 4hr close may trigger corrective gains in GBPUSD. It is possible 1.3300 will hold but based on our experience in most occasions a dip tends to materialize prior to corrective gains in similar scenarios.

It is difficult to determine which event may trigger the entry or corrective gains in the currency pair but Mark Carney’s speech on Wednesday is one fundamental events that may kick the strategy into play.

1.3405 is our target for GBPUSD.