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In this week’s report, we are getting technical on the short-term gold forecast as well as the AUD/USD and USD/CNH, and provide analysis on S&P 500 forecast.

• USD/CNH forecast remains bullish amid ongoing China concerns
• AUD/USD forecast is bearish after its failed breakout
• S&P 500 forecast has turned bearish in short-term after last week’s reversal
• The short-term gold forecast is negative thanks to the strength in USD

Welcome to Technical Tuesday, a weekly report where we highlight some of the most interesting markets that will hopefully appease technical analysts and traders alike. In this week’s report, we are getting technical on gold, AUD, CNH, and S&P 500.
 

Gold forecast

The short-term gold forecast remains bearish as the price continues to break down short-term support levels and gets offered on any bounces. The bullish trend ended in May when the breakout above the August 2020 record high of $2075 immediately failed. Subsequently, gold went on to break below its 21-day moving average, which is a popular short-term trend indicator. This MA has consistently provided resistance to any gold advance during June. Key support levels such as $2000, $1980, and now $1932ish have broken down. The latter is now the most important short-term level to watch as price tests it from underneath. For as long as gold holds below this $1932 level, the path of least resistance would remain to the downside towards $1900. Below $1900, the next big level is around $1850/55 area, which marks the base of the breakout in March and the 200-day average.

(Click on image to enlarge)

Source: TradingView.com
 

USD/CNH forecast

The USD/CNH has been a key barometer of risk appetite, especially towards Chinese equities and commodities such as crude oil and copper. The fact that the pair has been rising reflects a weakening Chinese economy and a reduction in their purchasing power. All else being equal, a weaker yuan means China will be by buying less commodities from its major trading partners like Australia and the Eurozone. The currency has also been hurt because of a dovish PBOC, which has been loosening its policy to fight a stalling economic recovery. Meanwhile, the US dollar has been on the rise thanks to the Fed remaining resolute in its hawkish rhetoric.

So, without any fundamental trigger, the path of least resistance is likely to remain to the upside, which should see rates break through the 7.2500 resistance level and potentially head towards last year’s high at 7.3750.

(Click on image to enlarge)

Source: TradingView.com
 

AUD/USD forecast

The risk-sensitive AUD/USD pair fell hard last week, and at the time of writing it was struggling to rise back above the 200-day moving average. So, more losses could be on the way as we head deeper into the last week of the month and quarter.

With the AUD/USD closing well below the key 0.6800 breakout level last week, this points bullish failure and may precede further weakness this week. That failure undoubtedly hastened the sell-off last week. Similar price action was formed on the upside earlier this month, when the breakdown below key support at 0.6580 failed to show any downside follow through.

If the AUD/USD closes below support around 0.6700 then this level could pave the way for a run down to that 0.6580 level again.

The bulls will want to see a confirmed bullish reversal first, before potentially looking for long ideas – whether that comes in the form of a hammer or a double bottom etc. In any case, a move north of 0.6800 would be a significant bullish development.

But right now, the chart looks quite ugly following the failed breakout, so I would favour looking for short ideas on this pair than long.

(Click on image to enlarge)

Source: TradingView.com
 

S&P 500 forecast

Last week saw the S&P 500 end a run of 5-week winning streak. This is likely to keep the bulls on the sidelines at the start of this week, as there’s now an increased risk of a deeper pullback, with technical selling supplementing a darkening macro-outlook. So, our short-term S&P 500 forecast is bearish. 

The loss of bullish momentum means there’s a greater risk for a downside move from here. On Monday, the index closed below support at 4345, and if it now decides to hold below this level, then bears this would increase the bears’ conviction, potentially leading to a drop towards the short-term bullish trend line around 4250ish, with the subsequent downside target being the Feb 2023 high at 4195.

On the upside, well, we need to see a confirmed bullish signal to re-establish the short-term bullish bias. Until that happens, the bulls may wish to wait for a confirmed reversal signal first.

(Click on image to enlarge)

Source: TradingView.com

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