A1 Trading Company

November 16, 2023

Waiting For A Pullback

Frank Cabibi

After some stellar inflationary news for the US market, the indices, gold and risk on pairs caught an incredible run to the upside. However, now that price has run as far as it did, it is normal for these assets to pullback to support before finding another wave of buyers.

EdgeFinder Analysis

AUDUSD is now a neutral rating on the EdgeFinder, marking a considerable score flip from the strong bearish reading it had in October. Smart money has bought the Aussie going into this week at a greater rate than the dollar.

However, retail is majority long on this pair which has a historically bearish month on the 10-year average. If price can break from the 0.65500s range, it could signify that the rally is turning into an uptrend for a longer term run higher.

Unemployment claims came out higher than expected in the US which is likely causing this rally in gold's price. The metal is still up against resistance on the 1D timeframe in the $1970s, and additional resistance is on a falling trend line.

As yields fall on the day, gold catches a swing despite yesterday's candle closed in a bearish way. If price does pullback from here, it may come down to test the $1950s or the lows around $1930s.

USOil's score saw a steady decline from the strong bullish reading. The score went from +6 to a -6 suggesting that the commodity is going lower. Smart money reported late but indicated that speculators were selling last Tuesday.

The majority of retail is long which is more confirmation of more downside. As inflation declined, so did oil's score on the EdgeFinder. And lower jobs numbers from the latest NFP report suggest a decline in oil demand.

Retail Spotlight

Retail is now bearish against the dollar as the top bought assets are AU and NU. Oil also has a heavy bullish bias from the retail side. Meanwhile, USDCAD and UJ are the most shorted.

Now that the CFTC has released the latest data on smart money, here is an overview of where they were looking last Tuesday. They had strong positions on the NAS100 to the long side along with AUD. The heaviest shorts from last week were SPX500, NZD and CAD.

Fundamental Spotlight

Fundamental data on gold suggests strength for the metal. Because it usually thrives off weak economic and labor data, seeing all three measurements come in gold's favor, the metal has a bias to go up. It's important to watch price action after the steep run higher. The fundamentals back gold, but it may experience some more consolidation until buyers step back in.

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