Gold Price Trading At Its 7-Year Highs
XAUUSD just tapped its highest levels since November 2012 earlier today when it peaked at $1,746.93. Gold price has been steadily trading higher for the past few trading days. Should buyers continue their momentum, the next resistance level is at $1,792.79 where gold price topped on September 2012. If you have missed out on this rally, it’s not yet too late. USDCHF can provide an alternative setup.
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What’s the Relationship Between XAUUSD and USDCHF?
In case you do not know yet, gold price and the Swiss franc are positively-correlated. This means that when XAUUSD goes up, USDCHF goes down. This is because the Swiss National Bank (SNB) is known as the central bank with the largest gold reserves in the world. Consequently, it implies that when gold price goes higher, so does the value of the SNB’s vaults.
On the hourly time time, it can be seen that the currency pair has been on a downtrend. This is evidenced by the descending channel that becomes apparent when you connect the recent highs and lows on USDCHF. As of this writing, the currency pair is trading near the bottom of the channel. This suggests that it may have reached its lower limit and could soon pullback to test the top of the channel. The price around 0.9660 seems to coincide with this upper limit as well as the 100 SMA. Reversal candlesticks at this price could be your signal to jump in on a sell. A stop loss above Friday’s highs at 0.9690 and a take profit at 0.9595 could easily give you a reward-to-risk ratio of over 2:1.
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