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  • Policy Induced Tumble Impacts Gold
  • Recovery Starts as Bond Yields Dip
  • Jobless Claim Increase Provides Momentum

The price of gold slumped late in the week following the hawkish views that came from the 2-day Fed meeting. News of a double interest rate hike to come in 2023 but the upkeep of the tone that inflation will remain transitory, did not sit well with the gold market as it slumped more than 5% at some stages, and well of the highs set earlier in the year. Despite this, and slipping close to $1750, it has started a recovery of sorts. This has picked up pace today as US bond yields dip and the market digests the increase in jobless claims on the week. In other commodities news, the sell-off has also been felt across precious metals and beyond.

Rate Hike Slams Gold Market

One of the key reasons behind the quick slump in gold prices on hearing the news from the meeting is that the precious metal does not play well in periods of higher interest rates. The non-yielding asset tends to be less favored when other types of assets can provide an improving yield. Should the inflation worry remain, and the Fed stick with their plans for a double rate hike in 2023, then many trading gold will certainly expect prices to fall further.

The other factor, beyond the general uncertainty of the whole situation that is playing out at the moment for gold in clearer view, is the rising US Dollar. This strengthening Dollar typically reduces demand for gold and therefore can result in price drops as seen.

Bond Yields Provide Recovery Potential 

Despite the fall-off in price that was evident through the middle of the week, gold prices managed to gain some ground again from lower levels in the previous trading session. This has seen them pick up around 1% to sit just below the $1800 in the early trading today.

Part of the reason behind this would seem to be US Treasury Yields. Both the 10-Year and 30-Year yields have drifted significantly lower despite the increase in inflation expectations. This stands by the thinking that any inflationary pressure that is felt can pass through quickly and be a transitory concern.

Increasing Jobless Claims Signal Further Respite

Another factor that has contributed to an upward recovery in gold prices today, along with silver which has dipped but not as strongly, is the US employment figures that were released yesterday. These weekly numbers came in at their highest point of the month with 412,000 initial claims. This is above both the number for the previous week and analyst expectations.

Given this confluence of data then, it may well be possible to see gold run up above the $1800 mark again prior to the end of this week. In the longer term though, it looks likely that prices could fall lower particularly if the Fed sticks by its plans for a 2023 increase of rates and inflationary concern continues.

Naabiae Nenu-B is a Medical Health Student and an SEO Specialist dedicated to flushing the web off fake news and scam scandals. He aims at being "Africa's Best Leak and Review Blogger" and that's the unwavering stand of Xycinews Media.

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Fx Analysis

Chart Art: Back-to-Back Yen Plays With AUD/JPY and GBP/JPY

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It may be the last trading day of the week in the forex market but that doesn’t mean you can’t sneak in a couple of pips before you close shop!

Check out AUD/JPY and GBP/JPY’s downtrends on the 4-hour chart.

Think you can make pips from these setups?

AUD/JPY 4-Hour Forex Chart
AUD/JPY 4-Hour Forex Chart

AUD/JPY is consolidating at the 81.25 area!

And why not? The level not only hits the 50% Fib retracement of last week’s downswing, but it also lines up with a mid-channel resistance AND a broken support earlier this month.

If you’re an Aussie bear, you can start loading them shorts as soon as you see some momentum. The 80.20 previous low is a good initial target but you can also aim for new monthly lows if the (bearish) force is strong enough.

Feeling like buying the Aussie instead? Look for new weekly highs for AUD/JPY and see if an upside breakout can lead to a retest of the 100 SMA closer to the channel resistance.

GBP/JPY 4-Hour Forex Chart
GBP/JPY 4-Hour Forex Chart

Don’t worry, you’re not seeing double. Guppy is showing us a similar setup, yo!

GBP/JPY is about to reach the 152.25 area that lines up with not only the 100 SMA but also the descending channel resistance that started gaining traction in late June.

This time, pound bears also have the support of a hidden (read: continuing) divergence on the chart.

Now who’s ready to sell GBP/JPY? The most recent candlesticks haven’t exactly hinted at a reversal yet, so keep your eyes peeled for the start of some selling. July’s lows are a good level to target but make sure you also lock in pips along the way in case the pound doesn’t go back to its previous support.

If you’re confident that the pound has seen its lowest levels against the yen this month and that GBP/JPY will break above its trend line resistance, then you gotta design trading plans around a possible upside breakout.

Good luck and good trading, my dudes!

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Fx Analysis

Weekly Forex Market Recap: July 19 – 23

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After a volatile start to the week on covid-19 fears, markets calmed down to a steady recovery by the end of the week.

The Canadian dollar was the top dog among the majors, not only rising with the recovery in risk, but also likely on rising oil prices as traders forecasts tightening supplies.

Notable News & Economic Updates:

Intermarket Weekly Recap

Dollar, Gold, S&P 500, 10-yr Treasury Yield, Bitcoin, Oil
Dollar, Gold, S&P 500, 10-yr Treasury Yield, Bitcoin, Oil

Risk aversion sentiment hit the markets at the start of the week as traders priced in fears that the recent rise in the covid-19 cases around the world would weaken the economic recovery. On the chart above, we can see the turn lower in risk assets (i.e., equities, oil, and bitcoin), as well as a fall in U.S. Treasury yields.

That sentiment lasted through Tuesday’s session, where a bottom in risk aversion sentiment seemed to quickly form, despite a lack of attributable news events or headlines. With no apparent catalysts for the shift in sentiment, that bottom was likely a “buy the dip” move by traders.

In the currency space, safe havens like the euro, yen, and Greenback benefited from the risk-off moves on Monday and Tuesday, and as expected in this environment, the comdolls were hard hit early on.

But as positive risk sentiment slowly recovered through the rest of the week, the comdolls eventually took the top spot among the majors, lead the Canadian dollar. The Loonie’s out performance was likely boosted by the swift recovery in oil prices as traders speculated that oil supplies would tighten.

The euro had the most notable scheduled event of the week for currency traders with the latest monetary policy statement from the European Central Bank. This event came inline with the expectations that the ECB would remain accommodative, raised their inflation goal to 2%, and re-iterated that they’re not too eager to pull emergency support anytime soon. Euro volatility quickly pick up quickly on the event, ending with the euro lower on the session.

USD Pairs

Overlay of USD Pairs: 1-Hour Forex Chart
Overlay of USD Pairs: 1-Hour Forex Chart

GBP Pairs

Overlay of GBP Pairs: 1-Hour Forex Chart
Overlay of GBP Pairs: 1-Hour Forex Chart

EUR Pairs

Overlay of EUR Pairs: 1-Hour Forex Chart
Overlay of EUR Pairs: 1-Hour Forex Chart

CHF Pairs

Overlay of CHF Pairs: 1-Hour Forex Chart
Overlay of CHF Pairs: 1-Hour Forex Chart
  • No major news or catalysts from Switzerland this week. Price action was mainly influenced by broad risk sentiment as discussed earlier.

CAD Pairs

Overlay of CAD Pairs: 1-Hour Forex Chart
Overlay of CAD Pairs: 1-Hour Forex Chart

NZD Pairs

Overlay of NZD Pairs: 1-Hour Forex Chart
Overlay of NZD Pairs: 1-Hour Forex Chart

AUD Pairs

Overlay of AUD Pairs: 1-Hour Forex Chart
Overlay of AUD Pairs: 1-Hour Forex Chart

JPY Pairs

Overlay of Inverted JPY Pairs: 1-Hour Forex Chart
Overlay of Inverted JPY Pairs: 1-Hour Forex Chart

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Fx Analysis

One Simple Trick to Avoid Overtrading

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Most forex newbies often think that taking more trades leads to catching more profits.

The more setups you take, the better your chances of winning, right?

WRONG!

This isn’t the lottery, y’all!

Overtrading refers to taking so many trade setups to the extent that you lose your market edge.

One of my favorite trading psychologists, Dr. Brett Steenbarger, explains that the root of overtrading is the mismatch between one’s profit expectations and market volatility.

In other words, traders often feel the need to catch multiple market moves in order to hit their goals.

While it’s helpful to set trading goals, there’s one major problem with this line of thinking.

The market does not move based on your expectations!

This kind of mindset may lead a trader to overestimate his trading skills in an effort to reach his targets and mentally convince himself that he’s had a good trading day.

While this may work in some cases, it can wind up being harmful to your trading psychology when it makes you feel invincible and overconfident that you can trade in absolutely any market environment.

If you often catch yourself in this situation, don’t beat yourself up! It’s much more common than you think, and it happens even to seasoned traders.

You see, most of us have been conditioned to think that we must work harder and do more in order to achieve better results. While clocking in your 10,000 hours of deliberate practice has its merits, it’s a misconception to think that working harder equates to taking more trades.

Working hard means taking the best (a.k.a. high probability) trade setups.

This could involve waiting patiently or sitting on the sidelines if you have to. Doing nothing and refraining to take a trade when it’s not aligned with your strategy is a trading decision in itself.

Of course this is much easier said than done, so here’s one simple trick that can help you avoid overtrading:

Take only ONE TRADE each day.

That’s right, no exceptions. If you catch a big win, you’re done for the day. If you snag a loss, you’re done for the day.

Day trading coach and author Galen Woods calls this the One Bullet Action Plan.

Setting this absolute one-trade rule forces you to think like you have just one bullet left, which means that you have to aim properly and pull the trigger at the right time in order to make the most out of your only shot.

It sounds so simple, but it requires a lot of work.

You have to comb through the charts and all the available setups to see which ones line up with your strategy, so this addresses the psychological need to “do more.”

You must be extra picky in filtering out the “best” one for the day and at the same time be alert in catching the move.

Keep the wisdom of the great American philosopher Eminem in mind: “You only have one shot, do not miss your chance.”

What about undertrading?

Don’t worry about that just yet. Far more traders wipe out their accounts from overtrading than undertrading.

Once you are able to easily avoid overtrading, you’ll be able to fine-tune your market edge.

From there, sticking to high-probability setups will be like second nature to you, helping you stay consistently profitable in the long run.

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