There is a trick that skaters have always used, which is to tilt and spin quickly before launching into the dance, and this is exactly what gives them the momentum that will push them as far as possible, and from here Alfred derived his law of technical analysis related to momentum:
The commodity or asset does not go up if it does not get enough momentum, and until it gets enough momentum to push it upwards, it must leave the last bottom and fluctuate at it for a long time.
The latest developments
After the interest rates were issued, they circulated and rose despite the interest rate rising to 1960, noting that the relationship between them is inverse, but we explained in our previous article that gold respects unemployment levels more than interest, and therefore the rise did not last more than hours until unemployment rates decreased and gold fell to 1870, It is currently trading at around 1870.
To remind me of a scenario that was repeated every time, and the only survivor of this scenario is the one who knows the rules that must be followed…
The most important rules
Considering that gold is on a date with the most important news this week, namely:
1. The bond auction and the increase in the bond yield here means that gold will go down
2. The Fed Chairman’s speech (if he refers to inflation, it means that prices will rise by at least 10%)
3. Unemployment complaints rates and an increase in those rates means a rise
Based on my belief that successful analysis is what reflects successful correlation, I tell you the most important rule that may be reflected on gold in the presence of conflicting news, which is the law of momentum:
In the event that gold encounters conflicting news, it depends on the rise or fall on the greater momentum, and the law of momentum requires that the price decrease until it obtains the momentum that can push it upwards, and this is what shows us that gold will decrease due to the rise in bond yields, but it may rise due to expected disasters and high levels of unemployment and inflation In the previous week, the US government provided 500,000 jobs, compared to the expected unemployment rate to rise to levels of no less than 800,000 unemployed.
And given that the possibilities are subject to the unseen until the definitive evidence appears, we enclose for you the most important scenarios, with an inevitable condition for each scenario:
Remember not to depend on the closing price until at least two hours after the news is issued, especially on gold, as the day on which the news is issued is not suitable for relying on technical indicators, and your only guide on the day of the news remains the momentum resulting from this news and the closing price.
In the event that the speech talks about inflation levels, unemployment levels rose, and the price stabilized above 1860, this means that gold will rise strongly towards 2000.
If you can’t follow the speech, focus on volume, as high volume means inflation is likely.
In the event that unemployment rates decline and the price stabilizes and closes below 1860, this means that gold will test 1800 before achieving a new record high.
Technical analyst opinion
In conclusion, dear investor, and given that the conditions we are going through, whether from natural disasters or from high levels of inflation, the best advice is to buy gold to hedge against any disaster, whether on the financial and political level or in terms of natural disasters, but focus on buying at a good price and from Good broker and last don’t forget to choose your recommendations provider carefully.
Analyst: Omar Sayyah
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