Gold forms double bottom, points to $1800. EUR/USD stays focused on 1.20.

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Gold forms double bottom pattern 

Gold recorded its second straight weekly gain last week, hitting a two month high of $1784. 

Persistent weakness in US treasury yields has boosted demand for non-yielding gold as has PBOC allowing domestic and international commercial banks to import a large amount of gold to meet domestic demand. 

Rising concerns over President Biden’s infrastructure plans and a tick up in US covid cases is lifting the US Dollar which could cap gains in the precious metal. 

Where next for the price of gold? 

Gold is trading marginally higher as the new week kicks off. It trades above its 50 EMA on the daily chart and the RSI is supportive of further gains. 

The precious metal has just broken above 1775 giving strength to the double bottom reversal pattern, suggesting that there could be further gains on the cards.  

A meaningful move over this level could see the bulls target 1800 round number ahead of 1817 high February 22. 

On the flip side, failure to hold above 1775 could see the price head back towards 1757 the 50 EMA, ahead of 1743 the 20 EMA and horizontal support. It would take a break below this level to negate the current bullish trend (GLD). 

EUR/USD stays focused on 1.20 

EUR/USD is picking up off overnight lows as the US Dollar’s rebound falters.  

Easing concern over the EU’s vaccine rollout are helping to underpin the pair, in addition to a dovish Fed and on going weakness in US Treasury yields. 

Where next for EUR/USD? 

The pair has been trading in an ascending channel since the start of the month. However, it failed at 1.20, broadly finding support at 1.1945.  

After slipping below the lower band of the ascending trendline overnight, the pair is attempting to push back into the ascending channel for another attempt on 1.20.  

The pair has pushed above its 20 EMA on the 4 hour chart and the RSI holds within positive levels and suggests more gains could be had. 

1.20 is the key level that bulls need to break ahead of horizontal resistance at 1.2050 high March 4 and 1.2110 the March high. 

On the flip side, support can be seen at 1.1970 the 20 EMA and the lower band of the ascending channel. A break through here could open the door to 1.1945 horizontal support and 1.1923 the 50 EMA (FXE, UDN).