Today, before the opening of the European session, gold was trading at 1,313.54 USD per Troy ounce. This is the second day in a row that gold has traded below the trend line on the 4-hour timeframe.
It’s still unclear whether the recent breakout of the trend line is false or not. I reckon that we could find out after the Federal Reserve meeting has ended. So, I’ll be looking either to buy or sell depending on the Fed’s decision. I’m considering the following two options:
If the Fed decides to keep the key rate at its current level today, and maintain, or reduce, the current trajectory of rate hikes, I’ll be looking to sell. From a technical point of view, I’ll be looking to sell if gold follows the following trajectory on the H4 timeframe:
Conditions: After the Fed’s meeting ends, the price continues to fall, rebounds from the “double top” level or lower, subsequently forms a top lower than 1,320 – 1,325 USD, and continues to move downwards. If this scenario plays out, I’ll open a short position. I’d like to add that the more the Fed softens its stance on monetary policy, or its rhetoric, the better it will be for the US dollar in the short term, and worse for gold.
If the Fed decides today to raise the key rate, or maintain it at its current level of 1.00% - 1.25%, but significantly raises the trajectory of rate hikes (i.e. tightens its rhetoric on monetary policy), I’ll be looking to buy. From the technical side, I’ll be looking to open a trade if gold prices follow the scenario outlined in this 4-hour chart:
Conditions: The price continues to grow after the Federal Reserve’s meeting ends, before which it mustn’t dip below the double top level of 1,290 – 1,293 USD (so as not to break the upwards trend on H4). If growth continues, I’ll open a long position. The stronger the Fed tightens its monetary policy, or its rhetoric on the subject, the higher the price of gold will rise.