Gold and bitcoin have not been overly correlated with any market over the past month
Given the quiet data calendar this week, price signals may be more useful when assessing potential trade setups
Overview
Gold and bitcoin are not particularly correlated with any market right now, suggesting increased emphasis should be put on price signals when assessing trade setups in the week ahead. Having broken minor downtrends on Friday with gusto, the bias for both is higher near-term.
Gold, bitcoin not influenced by macro environment
The correlation analysis below tracking the rolling 20-day relationship with a variety of market variables shows both gold (LHS) and bitcoin (RHS) have been doing their own thing recently, showing little to no relationship with the US dollar, real or nominal US bond yields, US inflation expectations or other long duration assets like tech stocks.
The lack of any meaningful correlation suggests that rather than trying to assess setups using macro events, the price action in these markets may be more useful for traders to consider.
Gold breaks downtrend, bearish momentum may be turning
The key reversal candle that I wrote about late last week proved to be a reliable signal for the price action on Friday, seeing gold break downtrend resistance dating back to the record high of late September.
With RSI (14) also breaking its downtrend, it looks like the mildly bearish picture of the past month is turning brighter for bulls, putting a retest of the record highs on the radar for traders. MACD is yet to confirm the signal, although it’s showing signs of bottoming.
We’ve seen a minor pullback in early Asia trade on Monday, seeing the price retest the minor uptrend from mid-September that provided support until broken early last week.
If the price holds above this level, consider buying above with a tight stop below for protection targeting a push towards the record high of $2685.7. If it were to be taken out, traders may look for a push towards $2700.