Gold looking to break out above 2k, DOGE may also go bearish

Gold prices are holding over $2,000 (£1,600), with DOGE also on the lookout for a breakout.

April 21, 2023
Gold looking to break out above 2k, DOGE may also go bearish
Matt Crabtree

Written By

Matt Crabtree

 
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On Thursday, spot gold prices rose over $2,000 (£1600) again, reaching around $2,006 per troy ounce. Market participants were more conservative as a result of a lack of new high-quality macroeconomic data and rising fears about the economy's future, which favored the safe-haven metal against the damaged US Dollar.

Investors are also wondering if DOGE will recapture the same glory it had in 2021. 

Technical indicators

Although the pair lacks directional strength, daily chart technical indicators continue to point to the higher. Even yet, it is growing above all of its moving averages, with the 20 SMA only a few pennies over the aforementioned Fibonacci support, which is helping to fortify the region.

Meanwhile, technical indicators continue to drift sideways inside positive territory, mirroring the broad US Dollar's decline.

Gold's near-term outlook is neutral to positive, as seen by the 4-hour chart. Current price action has it above both of its moving averages, with the shorter of the two losing its bearish vigour and converging with the longer at about $1,997.

Meanwhile, technical indicators are stuck above their zero levels. Once XAU/USD breaks above the weekly high, it may go toward the all-time high around $2,075. The 38.2 per cent retracement of that daily run, though, at $1,957.10, is a crucial support level.

Consensus: 1,991.80; 1,980.80; 1,969.20

Challenges: 2,015.00 2,028.30 2,040.00

An overview of the basics

As currencies tumble into chaos, on Thursday, spot gold prices rose over $2,000 again, reaching around $2,006 per troy ounce. Market participants were more conservative as a result of a lack of new high-quality macroeconomic data and rising fears about the economy's future, which favoured the safe-haven metal against the damaged US Dollar.

Thursday's trading was relatively quiet throughout the world, with US indices recovering from their morning lows but still showing signs of economic weakness. Meanwhile, government bond rates dipped after another batch of lacklustre data from the United States.

Both the 2-year and 10-year Treasury notes saw their yields drop by 7 basis points (bps), with the 2-year note now offering 4.16% and the 10-year note 3.52.

The number of people filing for unemployment benefits rose by 245k in the week ending April 14, and the result of the Philadelphia Fed Manufacturing Survey for April was -31.3, which was much lower than the -19.2 projections. Finally, month-over-month declines in March Existing Home Sales were 2.4%.

U.S. Treasury Secretary Janet Yellen, meantime, has said that a total break with China would be destabilizing to the globe. But he also warned that the United States would make it plain that Chinese firms would face harsh penalties if they violated sanctions against Russia.

Last but not least, Yellen mentioned the recent financial crisis, saying that the government has to make sure the banking sector is stable.

Gold futures: We do not expect any more declines

Traders decreased their open interest holdings in gold futures by roughly 8,000 contracts on Wednesday, according to flash data from CME Group. However, after two days of declines in a row, volume increased by around 40.8K contracts.

So far this week, gold prices have not done much of anything. However, Wednesday's decline was supported by falling open interest, suggesting that a further decrease is not expected in the immediate future.

Gold prices have been rather stable recently, although there have been brief periods of strength aiming for the yearly top around $2050 per ounce troy (April 13).

Investors continue to favour gold.

Similar predictions for DOGE, meanwhile

The value of dogecoin increased by 23000% in 2021; is DOGE’s price repeating its past patterns?

After reaching a low of $0.0491 in June 2022, the cryptocurrency market as a whole has rebounded, and Dogecoin's price (DOGE $0.09) has nearly doubled.

DOGE reached a high of $0.0942 on April 20th, up about 94% from its yearly low. However, despite the stock's remarkable recovery, its current price is 88% below its May 2021 high of $0.76. Therefore, over longer time periods, the DOGE/USD pair has yet to develop a definitive positive reversal.

What does the future hold for Dogecoin?

After Elon Musk publicly backed Dogecoin in 2021, its value increased by over 23,000. In spite of Musk's dismissal of cryptocurrency as “hustle” on SNL in May 2021, the DOGE/USD exchange rate eventually reached a record high that month.

The price of DOGE has begun a protracted negative cycle, fueled by fears of a Fed tightening (which will actually result in interest rate reduction in 2022 and 2022). The DOGE selloff was further worsened by the failure of many prominent cryptocurrency businesses, including Terra LUNA, FTX, etc. 

Despite the prolonged price drop, October 2022 witnessed a 100% recovery. DOGE's rise corresponded with renewed optimism that it will replace BTC as Twitter's preferred payment method. 

While Musk has yet to implement a DOGE payment method on Twitter, he did change the bluebird emblem with the Shiba Inu trope's original mascot earlier this month. On hearing the news, DOGE jumped by as much as 40%.

Fundamentally speaking, Dogecoin's year-to-date gains can be maintained with the support of speculation. Even with increased use, like as for Twitter payments, the price is still 700% below its all-time high.

Takeaway

Gold continues to be a firm value store. 

According to fractal analysis, a positive turnaround for Dogecoin would need it to stay above its two important weekly exponential moving averages (EMA).

In particular, the price of DOGE has tried to end above its 50-week  and EMA (the blue wave) at $0.0917 and $0.0895, respectively. That is how it behaved between April and November of 2020, before its price exploded by 30,000%.

Due to competing factors, it is possible that DOGE may not have a comparable price surge of 30,000% in 2023. Meme-coin prices may aim for a run up to its 2023 high of $0.76 if the Fed decides to reverse course on interest rates or if Twitter decides to accept Dogecoin payments.   

In contrast, if price action reverses from these EMAs, an established continuation pattern known as an ascending triangle may be triggered.

When the price moves back and forth between an ascending trendline and a horizontal trend line on a graph, the pattern is formed. The situation usually improves once the price makes a breakout in the direction of the prior trend.

DOGE's ascending triangle looks to favor the bears due to the currency's prior downturn, with the bears setting their sights on downward targets at distances equal to the shape's highest elevation from the probable breakout point.

This results in a 12-month price target for DOGE of $0.0363 to $0.0469, or a decrease of 45-60% from current levels. 

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