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The FxPro Analyst Team

FxPro Forex Analysis: US 500 Index and Gold Analysis – April 12, 2018

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The US 500 Index has been in a sideways pattern for the last few weeks, as exemplified by the 4-Hour chart, where the 50-period MA at 2638.40 and the 100-period MA at 2651.00 contain price action. The area of potential importance on the 4-Hour chart is the appearance of an inverted head and shoulders pattern. The left shoulder low was created on 23rd of March, the head on the 2nd of April and the right shoulder on the 6th of April. A break above the blue trend line on the chart would be a trigger for this pattern, with a potential target above 2765.00. The neckline trigger is found at 2667.00. The descending blue trend line at 2745.00 provides major resistance above.

Support comes in at 2622.00 and 2619.91. A break under the right shoulder at 2585.00 invalidates this pattern and opens the way for a drop to 2555.00, with further support at 2528.00 and 2506.00, followed by the major support at 2500.00.

US500 4-Hour Chart

US500 4-Hour Chart

Gold

Gold has pierced its resistance trend lines and dropped back lower, as sellers take new positions and some of the buyers take profit. The rise in geopolitical tensions has boosted the price but there are strong opinions and levels to be overcome before the price moves firmly above 1365.00. The important event for bulls now is that the market continues to create higher lows and retests 1365.00 until it breaks. The first trend line in blue is found at 1354.67, with the red trend line at 1363.00. A break higher targets 1378.00 and 1390.50, followed by the resistance zone around 1400.00.

For the bears, a new lower low is needed and a drive to 1340.94 is the first requirement. They will look to a double top at 1365.00 and cite a target of 1240.00. But to achieve this, 1325.00 must be swept aside on a strong down move, followed by 1311.14 and the low at 1302.40. A break of this low is not enough, with the 1300.00 level so close by, supported by the 200 DMA. A loss of 1292.00 could be enough to drive price action towards the double top target.

Gold Daily Chart

Gold Daily Chart