Multi Timeframe Analysis

Hint: Look only for sell setups

Recommendation:

XAUUSD broke the weekly bearish channel and now finds strong rebuff on the W1 and M1 resistance. Further adding to the yellow metal's woes is the overextended Weekly impulse that requires a retrace to the 38.2% fibonacci before any further bullish move .

Pertinent Developments:

Gold racked modest weekly earnings despite Wednesday's steep decline. While US inflation expectations and T-bond yields continue to drive XAU/USD moves, key resistance and support levels for gold stay intact.

The XAU/USD pair remained in a consolidation phase below $1,850 at the beginning of the week but came under strong bearish pressure on Wednesday and dropped more than 1%.

The information published by the US Bureau of Labor Statistics revealed on Wednesday that annual inflation , as measured by the Consumer Price Index ( CPI ), surged to 4.2percent in April from 2.6percent in March. This reading surpassed the market anticipation of 3.6percent by a large margin and triggered a rally at the US Treasury bond yields. The grade 10-year US T-bond yield gained almost 5 percent and rose over 1.7% for the first time in a month.

As a result, the greenback outperformed its rivals and compelled XAU/USD to fall sharply.On Thursday, the US Department of Labor reported that the weekly Initial Jobless Claims fell to 473,000 from 507,000. With this upbeat reading giving a boost to risk sentiment, Wall Street's major indicators recovered decisively and made it hard for the USD to preserve its potency. The renewed USD weakness enabled XAU/USD to get traction. The US Census Bureau announced on Friday that Retail Sales in April remained unchanged at $619.9 billion, compared to analysts' estimate for an increase of 1 percent. Furthermore, Industrial Production expanded by 0.7percent in April while the University of Michigan's Consumer Sentiment Index declined to 82.8 in May by 88.3. Regardless of the uninspiring statistics, risk flows continued to control the financial markets and the S&P 500 Index climbed more than 1 percent for the second consecutive day. Additionally, the 10-year US T-bond yield fell 1 percent and aided gold push higher before the weekend.

Shorting positions are safe at this point given the strengthening DXY and tapering gold impulse.

Take a market order position upon the confluence of valid entry rules on the 4H or 1H chart.

-=ENTRY RULES=-

Trading philosophy: Don’t short at the lowest of the bearish momentum nor do we long at the peak of a bullish impulse. The safest entries are at the end of a retrace on the 38.2%, 50%, 61.8% or 78.6% fibonacci back in the direction of the master trend.

Note: I use Daily/4H or 4h/1H market structures with wave analysis to prep for potential entries. The RSI , MACD and EMA indictors are confirmation for entries at the 4H or 1H timeframe

For SHORT:
4H chart should confirm that the bullish retrace had turned bearish in the direction of master trend. The MACD should have dropped below zero signifying a bearish environment. Price would have dropped below the 10 and 20 EMA . For good measure, check that the 4h and D1 RSI is below the 50 signal line

For LONG:
4H chart should confirm that the bearish retrace had turned bullish in the direction of the master trend. The MACD should have gone above zero signifying a bullish environment. Price had gone above the 10 and 20 EMA . For good measure, check that the 4h and D1 RSI is above the 50 signal line

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