Binary options on gold continued to trend lower this Wednesday after early week’s rally lost the steam following the lack of clear hints over Fed’s QE third round within Ben Bernanke’s speech during his semiannual testimony to Senate. Binary gold traders will be paying close attention once again to the Fed’s chairman in the second part of his testimony later in the session, in front of House Financial Services Committee even though he may only repeat what already mentioned Tuesday.
Adding to bearish momentum this morning, Chinese house price data came higher than expected which might undermine Beijing’s leeway to introduce further monetary easing measures in the upcoming period. Furthermore, the latest rise in home prices could be a big concern for China’s policymakers given that it came in the wake of two reductions of interest rates in less than a month.
The Chinese factor was supportive somewhat yesterday and played to offset partially disappointment triggered by Bernanke’s comments which dashed dovish hopes. That came after the news suggested that China would increase railway infrastructure investment through the next six months to bring the full year spending to nearly CNY 450b, raising hopes that the Chinese stimulus package this year will be higher than estimated.
As mentioned above, today’s comments from Federal Reserve Chairman by which he closes his two-day testimony to Congress will be the most closely watched event in the upcoming hours. If passed without provoking a new selloff round, it would mean that current weak dovish facts are already priced in the binary markets and Bernanke’s last update don’t carry something disastrous to the binary commodity. Thus, investors would turn their focus toward other dominating factors that influence direction on a daily basis such as dollar performance and developments in Eurozone’s debt crisis.
Technically, the chart shows the price trying to base around $1576 after Tuesday’s setback was already contained at $1570 but the overall bearish sentiment might suggest the underlying asset to retest those barriers to confirm that bearish wave might be over. The $1580 mark looks crucial in the shorter term prospective, it represents 38.2% retracement of last bear run between $1625-$1555. A sustained close above this level could improve the structure and signal another upswing to test the solid resistance at $1600 surrounding area which is a psych threshold and comprises recent highs, 200 MA and 61.8% retracement. Rallies to this barrier could be an opportunity to activate put options amid the current bears market.
The information in the above analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.