A1 Trading Company

November 30, 2023

Expecting A Pullback

Frank Cabibi

Today's economic figures came out in US and Canada. GDP came in higher than expected in Canada while the price of goods purchased by consumers was lower than last month. Here are some pullback ideas for USD and CAD from GDP and PCE numbers.

EdgeFinder Analysis

NAS100 is a bullish reading on the EdgeFinder still. Today's PCE numbers came in lower than last month and as expected from economists. Lower price of goods is a good sign for the stock market in the US as it suggests a decline in inflation and reinforces the lower CPI reported month-to-month.

Price is not reacting positively to the higher GDP numbers yesterday and lower PCE today, however. The index continues to drift higher in the long run, but the past several days have been rather uneventful as $15,900 to $16,160 have been in fluctuation.

Gold is a +7 bullish reading on the EdgeFinder and the highest bull rating as of now. However, price is looking a bit overextended to the long side after October and November's incredible 13% run. There is still heavy buying volume on the metal which suggests that investors want to take price higher.

In the meantime, we should watch for a pullback to around the $2010s level where there is a previous break in resistance on the 1D timeframe. All USD assets are waiting for the Fed to start mentioning rate cuts which likely won't occur any time soon though. Higher rates for longer seem to be the Fed's agenda for now.

Dollar-Cad is a interesting pair to say the least. The recent score flip from strong buy to a -2 suggests declining strength in the dollar but price is up today. Higher GDP numbers in Canada suggest CAD strength.

The problem is that the pair is battling with historical gains from seasonality, inflation and COT data. The pair seems mixed overall, but the general anticipation of Fed cuts is still in investors' minds. Most pairs surrounding to USD are stuck in consolidation for the time being as everyone waits for a move to be decided.

Retail Spotlight

Retail is now starting to show a more decisive position on the indices and gold. As the majority of traders are short stocks, gold and UJ, we can be more confident in the upside for these assets. On the other hand, USOil, NZDUSD and USDCHF are largely short.

Smart Money Spotlight

Now that we have COT data in, we can get a better picture of institutional sentiment. NAS100 is more bullish but SPX is short. Gold was bought, but so was the dollar. Very mixed sentiment across the board. CAD was also bought.

Fundamental Spotlight

Taking a look at gold's score relative to the US economy suggests more bullishness for the metal. There are just a few things to consider to the short side however. Due to the double digit percentage gains on both gold and the stock market, it is normal to expect a pullback here for the near term. The dollar may continue to find upside, but it seems like a potential setup for gold longs in the future, especially with the majority of fundamentals pointing in this direction.

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