Gold Surge & Forex: CPI Impact on EUR/GBP

Hello, market watchers! Today, on December 14, 2023, let's briefly look through the main events shaping today's forex market. 

Overview of Current Market Conditions

Firstly, the net profit is negative, around $4,000, with a current net worth of approximately $621,000. Following the Federal Reserve's decision to maintain interest rates, marked by dovish remarks from the Fed Chairman, the US dollar saw a significant decline. In contrast, gold and non-US currencies experienced substantial increases.

Personal Trading Strategy

Last night, I refrained from trading in response to the Federal Reserve's actions, choosing instead to buy crude oil and take a short position. This resulted in a 40-point loss from a single crude oil trade.

Read Also: Technical Analysis

U.S. Dollar Index Analysis

Current Trends

The U.S. Dollar Index is showing a downtrend, breaking below previous levels. There's a high probability of continuing this trend, indicating a shift towards weakness.

Therefore, I've removed the previous trend lines. At this point, it might be challenging to identify the earlier trend, and, of course, we can't be too certain as it's essentially a large bearish candle.

In terms of the market, whether the current trend will reverse or not, or whether today's trend will play a crucial role, we'll have to see tomorrow. It's essential to confirm how today unfolds.

Trading Strategy

Considering the market structure, the U.S. Dollar Index seems inclined towards shorting at higher levels. A key resistance level to watch is around 103.2. This is a significant resistance level. For long positions, a rebound trade around 103 might be considered.

That's the situation for the U.S. Dollar Index.

Gold Market Analysis

Recent Performance

Gold experienced a significant one-sided upward trend, rising nearly $60 in a short period, which was unexpected in terms of its rapidity and strength.

Examining the daily gold chart, the current upward trend is in line with expectations. However, the speed and magnitude of gold's ascent were surprising. 

Normally, such a rise would span two to three days, or even up to five. However, it was completed in just a few hours last night, which exceeded expectations in terms of intensity.

Current Strategy

At the daily level, cautious long positions are advisable. Gold has reached a crucial resistance area around 2040 in the 4-hour timeframe.

In this position, what will gold do next? It will engage in a critical battle. In other words, in this area, if gold stabilizes, specifically around 2040, it might further rebound. 

Conversely, if it cannot break through this area, gold may experience a pullback and move in a more oscillatory manner.So, for gold now, you don't need to rush into blindly chasing long positions. 

Considering CPI Data

With the upcoming CPI data release tonight, long positions could be considered if gold stabilizes above 2040. Alternatively, a pullback around 2020 might present a good opportunity for going long on gold.

I want to make it clear that my views on the CPI data come from careful study and analysis, not just a feeling. I look at the data closely and make informed predictions. This isn't about guessing; it's about thoughtful examination.

For trading gold tonight, the 2020 mark is a smart point to think about buying more (going long). This is especially true since the CPI data might help gold get past the tough 2040 level.

Looking at what's happening today, right before the data comes out, I would pre-set some long positions in gold because I believe there's a chance for gold to open up towards 2040. 

Additionally, I don't expect the data tonight to be disappointing.

Crude Oil Trading Approach

After a false breakout in crude oil, I've decided to refrain from trading it for the rest of this week, reassessing the situation next week.

EUR and GBP Strategy

EUR Outlook

For the EUR, the strategy is to go long on a pullback, focusing around 1.083.

GBP Outlook

The GBP shows a trend conversion from bearish to bullish. Long positions are considered during pullbacks, with previous resistance turning into support.

Summary of Today's Trading Strategies

• US Dollar (USD): Short positions on a continued decline.
• Gold: Long positions around 2020, considering the CPI data.
• Crude Oil: No trading for the rest of the week.
• EUR: Long on pullbacks around 1.083.
• GBP: Long positions during pullbacks, particularly around 1.259.

In summary, these are the trading strategies for today based on the current market trends and data.

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