By: DailyForex.com
The XAU/USD pair closed the day lower than opening as the bulls failed to break through the 1400 level once again. The bulls have been struggling to push prices above this barrier for almost 4 days.
Today's main events will be Fed Chairman Ben Bernanke's testimony before the Joint Economic Committee and release of the minutes of the Federal Open Market Committee meeting held on May 1. Since the U.S. dollar have been getting a strong boost from a growing perception the Fed is considering an early start to tapering off its quantitative easing program, investors will be looking for any hints of changes in the Fed's policy of monetary easing.
Although a warning by Moody’s of a potential downgrade of U.S. bonds this year resulted in some short covering at the beginning of the week, the pattern on the daily chart suggests that the bullish momentum which pushed prices from 1321 to 1486 seems to be diminishing. Prices are still below the Ichimoku cloud on the weekly, daily and 4-hour charts, indicating that the bears are dominating the market. Until the technical outlook changes, I will be selling on rallies.
The bulls will have to break and hold above the 1400 resistance level in order to gain more traction. If that happens, there will be resistance at 1411, 1430 and 1442. However, if the downward pressure continues and we drop below 1363, the most likely targets will be 1336.50 and 1321. A sustained break below the previous low would make me think that the bears will be pushing the pair towards 1266.
