Two trades to watch: Dax, Gold
Fiona Cincotta January 19, 2021 6:29 PM
Dax looks back towards 14000 amid an upbeat market mood ahead of ZEW economic sentiment data Gold awaits further direction from Janet Yellen
Dax advances back towards 14000
• An upbeat market mood after Monday’s lull is lifting the Dax along with its European peers. Eyes on vaccine updates, Yellen's testimony setting the case for fiscal stimulus.
Immediate resistance can be seen at 14,000 prior to 14137, high 8th January.
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A look at Gold ahead of Yellen’s testimony
• After testing $1800 Gold extended its recovery to $1840 where it has stalled ahead of the keenly awaited appearance US Treasury Secretary Janet Yellen’s hearing.
• Janet Yell has yet to endorse the larger covid stimulus package of $1.9 trillion which President elect Joe Biden announced last week.
• Prospects of additional stimulus bode well for inflation hedge gold, although US Dollar strength has dampened demand for the yellow metal.
Gold technical analysis
Gold trades +0.1% at $1840 at the time of writing having picked up from support at $1800.
It trades within a descending channel dating back to late August on the daily chart. However, on the 4 hour chart the picture is starting to look more bullish. Gold has broken above the steep descending trendline from early January. A bullish divergence trend is also being noted on the RSI.
Gold is testing its 20 sma at $1840. A break above here is needed to open the door to the 50 sma at $1860 before a move towards the upper band of the longer term descending trendline at $1880.
Failure to break through the 20 sma at $1840 could see an immediate test of the descending trend line resistance turned support at $1835 before the round number and yesterday’s low of $1800 is approached.
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