By ForexTime
The precious metal is busy with a correction wave in an uptrend on the weekly timeframe which could act as a possible area of trendline support. Looking at the daily charts, a downtrend is advancing but the price is getting closer to a weekly support level and a higher bottom might already be in progress.
A significant move could be around the corner with the incoming US CPI report acting as a fundamental catalyst. More evidence of cooling price pressures may boost bets around the Fed cutting interest rates, supporting gold prices as a result. However, a hot reading could dampen hopes around the Fed taking action early this year – potentially dealing a blow to zero-yielding gold.
A look at the 4-hour time frame will yield more insight.
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The 4-hour chart is still in negative territory with the price dipped below the 50 Exponential Moving Average. The market structure has given a warning though by making a higher bottom and traders will be watching closely to see how the market reacts to the upcoming CPI news event. If buying pressure increases and the price goes above 2042.09, a long opportunity will be on the books.
Attaching a modified Fibonacci tool to the trigger level at 2042.09 and dragging it to the higher bottom at 2020.31, four possible targets can be determined:
If the price at 2020.31 is broken, this scenario is no longer valid.
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