Non Farm Payrolls Day: Spot Gold Analysis: XAUUSD: $1866/1836 or $1907/1926?

Fundamental Analysis | CMP $1875

Gold Price was observed capitalizing on an overdue correction in the US dollar on 04 May 2022, as the Fed poured cold water on aggressive tightening bets. Fed Chair Jerome Powell explicitly said Wednesday that the US central bank is not considering a 75 bps rate hike in June, sounding a less hawkish tone than markets had expected. The US Treasury yields also took a beating while the Wall Street indices gallops on a risk-on market profile. The dollar also felt the pain from reduced demand for safe havens, aiding the Gold Price rebound on 04 May 2022.

However on 05 May, 2022 Gold crashed from 1907 resistance zone till 1888 and extended the losses till 1866 today early morning. I had mentioned in my FOMC Day analysis the possibility of crash till 1866/1830 zone, after rejection from 1907/1926 zone. Though Gold reversed from 1907 zone, further crash till 1866 is indicating the next crash junction as 1836/1818 zone, in reversal we may see a repetition of the upwards price movement till 1888/1907/1926 zones in sequence.

Looking forward, the US Nonfarm Payrolls will offer fresh insights on the Fed’s forward guidance. In the meantime, the broader market sentiment and China’s covid lockdowns-led growth fears will continue to influence gold trades.

Dow tumbled 1,000 points for the worst day since 2020, Nasdaq drops 5%

Stocks pulled back sharply on Thursday, completely erasing a rally from the prior session in a stunning reversal that delivered investors one of the worst days since 2020. The Dow Jones Industrial Average lost 1,063 points, or 3.12%, to close at 32,997.97. The tech-heavy Nasdaq Composite fell 4.99% to finish at 12,317.69, its lowest closing level since November 2020. Both of those losses were the worst single-day drops since 2020.

The S&P 500 fell 3.56% to 4,146.87, marking its second worst day of the year. A common warning on Wall Street for a decade is that trading desks have been overrun by people who are too young to know what it’s like to navigate a Federal Reserve tightening cycle. They’re finding out now. 100% reversal of the gains within half a day is just truly extraordinary, and I alerted this in advance in my last analysis.

In markets, there’s turbulence, then there’s whatever you call the last two days, when a 900-point Dow rally was followed 12 hours later by a 1,000-point decline. Hundreds of billions of dollars of value are conjured and incinerated across assets in the space of a day lately, a stark reversal from the straight-up trajectory of the post-pandemic era.

Where once every dip was bought, now every bounce is sold. Thursday was only the fourth day in 20 years in which stocks and bonds each posted 2%-plus declines, going by major exchange-traded funds that track them. Concerted cross-asset stress of that magnitude reliably spurs speculation that big funds are being forced to sell.

We bought Gold at following price zones in last three days:

1862/1866/1875/1885 (1866/1888 S zone)

We sold Gold at following price zones in last three days:

1909/1907/1896 (1907 R zone)

US 10 Year yields stand at 3.067, USDJPY at 130.51, XAUXAG ratio at 83.69  and Dollar Index at 103.780 at the time of writing.

How to trade on NFP data today?

Scenario A: Gold: $1836/1818/1777?

If the bearish momentum extends, gold price could fall further towards 1866/1836 (after 1846 S2) with 1818/1777 as final destination, if Gold crash halts at 1836 or 1818 zone a reversal can be expected with a RT 23.6 on M5 and M15 30% RT before/in next 10 days.

Scenario B: Gold: $1907/1926/1947?

If the Bullish momentum pushes Gold price across $1888 barrier, $1907 and $1926 can be the next target for Gold, opening way to $1947.

Heading into the NFP showdown today, gold price is lacking a clear directional bias, as investors are hesitant to place fresh bets due to ongoing saga of high volatility. The US NFP will emerge as the main market driver for gold price today.

Technical Analysis | CMP $1875

Gold Price – Key Indicators, Factors, Price Zones & SR Levels to watch:

SMA
H1 SMA50	1880.33
H1 EMA100	1881.22
H1 EMA200	1890.80
H4 SMA50	1885.10
H4 EMA100	1906.22
H4 EMA200	1916.16
Daily SMA50	1933.33
Daily EMA100	1889.69
Daily EMA200	1857.37

SR ZONES
R1	1884
R2	1907
R3	1930
R4	1944
R5	1967
S1	1869
S2	1846
S3	1823
S4	1809
S5	1786

PRSR ZONE BASED TRADING SCENARIOS

Figure 1

PRICE CHANNEL | PRTP BASED TRADING SCENARIOS

Figure 2

A break above $1907 after M1 M5 23.6 retracement format, might result in price trap of $1926-$1947 on a longer run and a further bullish trend might help GOLD bulls to achieve $1966. However a crash below $1866 might open gates for $1836 (after S2), $1818/1777 zone before retracement is achieved at 23.6 M5, M15/M30 in next 9 days.

TRADING STRATEGY:

Observe price at US OPENING SS1 and then US SS2

Observe S2-S3 zone and R2-R3 zone for reversals/retracement, Target NAP

Do not enter between the S/R zones or in pivot zone

Observe: FIB 23.6% on M1 and M5 for NAP target price
after 30/60/90/120 minutes of NFP

Price of Focus (POF)

Crash scenario:

S2 -6/9 RT NAP
S3 -3/6 RT NAP
S4 -6 RT NAP

Rise scenario:
R2+6/9 RT NAP
R3+3/6 RT NAP
R4+6 RT NAP

Implement RM till 30 after 15/30 min. and price gap 12/18/24 after NFP
Implement GR/SM  after 24/40 price movement

Golden Ratio based money management should not be used at least till $18 price movement in any direction, if SM needs to be ignored.

Figure 3

Kindly observe the crucial limits/stops levels mentioned by me in this analysis in addition to possible crash and rise zones as mentioned in Figure 1 and 3.

Today, I will prefer to BUY session/daily lows below Support zone (-3/6/9 pattern) S2,S3 and S4, and I will prefer to SELL above Resistance zones 2 and 3 with a target of NET average profit, if fundamentals support and favour the same.

Movement of 24/45 or 60 dollars on Gold price is not something unexpected nowadays, and a surprise on Monday during early trading hours can not be ruled out too, so closing all positions today in net average profit is always the best trading strategy for every trader who wants to safeguard his principle.

BUY/SELL STOPS | BUY/SELL LIMITS: TARGET NAP ( Net Average Profit):   

S2 ZONE 1846 | DOWN TREND (Below 1840)  : 1836/1818/1800/1777 stops
R2 ZONE 1907 | UP TREND (After 1909)          :  1916-1926-1947 stops

Read my analysis dated 04 May 2022 (FOMC Day) here: https://bit.ly/04MayAnalysisReviewPR

It is always wise to first PLAN THE TRADE, and then TRADE THE PLAN! Hence, it is suggested to first observe the crash or rise with specific zones and levels in mind on the basis of various fundamental and technical parameters mentioned above, before entering a trade in a specific direction with a target of net average profit in a specific set of trades.

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