Head-and-Shoulders Top Pattern Emerges on Daily Chart, Signaling Potential Downtrend

Economic

Forex

Summary:

Recently, the European Central Bank (ECB) has repeatedly signaled a dovish stance, prompting markets to bet on further interest rate cuts in the future.

SELL EURUSD

Close Time

CLOSED

1.13095

Entry Price

1.08900

1.14800

1.15198 +0.00248 +0.22%

40.3

Pips

Profit

1.08900

1.12692

Exit Price

1.13095

Entry Price

1.14800

Fundamentals

The euro has remained weak due to growing expectations of ECB monetary easing. Although the Eurozone Sentix Investor Confidence Index rebounded to -8.1 in May, it remains in negative territory, reflecting cautious sentiment toward economic recovery.

ECB officials have amplified dovish rhetoric. Rehn, governor of the Bank of Finland, explicitly highlighted the exchange rate as a policy consideration, hinting that larger rate cuts could follow if June's inflation projections fall below the 2% target. This has intensified downward pressure on the euro.

Meanwhile, diverging economic fundamentals between the Eurozone and the U.S. exacerbate the imbalance. Internal challenges plague the Eurozone. German manufacturing shows marginal improvement, but overall factory new orders have contracted for 14 consecutive months. At the same time, Spain's recent mass blackout exposed aging grid infrastructure (half of the facilities are over 40 years old), with a $2.3 trillion energy transition funding gap unlikely to be resolved soon.

In contrast, the U.S. economy remains resilient, supported by service sector expansion. While the demand for durable goods has softened, a stable labor market (April nonfarm payrolls rose by 177k) cushions consumer spending. This reduces urgency for Fed rate cuts, propelling the USDX above 100 (year-to-date high) and 10-year Treasury yields above 4.35%, widening the real interest rate differential.

Technical Analysis

Head-and-Shoulders Top Pattern Emerges on Daily Chart, Signaling Potential Downtrend_1

The daily chart shows two consecutive sessions with long upper shadows, signaling weak bullish momentum and bearish sentiment. A potential head-and-shoulders top pattern is forming. A bearish close today would complete the right shoulder, significantly increasing the likelihood of a downside breakout.

Selling at highs is recommended.

Trading Recommendations

Trading direction: Sell

Entry price: 1.1320

Target price: 1.0890

Stop loss: 1.1480

Valid Until: May 20, 2025, 23:00:00

Support: 1.1270/1.1090

Resistance: 1.1473/1.1572

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

Gold continues to gain ground as geopolitical instability and uncertainty around U.S. trade policy boost demand for safe-haven assets.

BUY XAUUSD

Close Time

CLOSED

3369.91

Entry Price

3500.00

3320.00

3368.72 -3.31 -0.10%

89.4

Pips

Profit

3320.00

3378.85

Exit Price

3369.91

Entry Price

3500.00

Gold prices (XAU/USD) remain firm near a two-week high, supported by a convergence of macroeconomic and geopolitical crosswinds that are fuelling safe-haven inflows into the precious metal. As of early European trading hours on Tuesday, spot gold is trading just beneath a recent high, reflecting market trepidation surrounding erratic shifts in U.S. trade policy and the broader backdrop of global unrest.

This week’s rally in gold is primarily underpinned by a fresh wave of geopolitical anxiety. Russia has accused Ukraine of launching repeated drone attacks on Moscow, compelling authorities to temporarily shut down the capital’s major airports. At the same time, tensions in the Middle East have intensified following Israeli airstrikes on Yemen’s strategic Hodeidah port. These strikes, reportedly coordinated with the United States, came in response to a Houthi missile attack that struck Tel Aviv’s Ben Gurion International Airport on Sunday. Such incidents have once again cast a long shadow over the global geopolitical landscape, propelling demand for traditional safe-haven assets like gold.

Concurrently, markets remain uneasy over the unpredictable nature of U.S. trade policy. Over the weekend, U.S. President Donald Trump suggested imminent trade deals with unnamed countries, adding to the recent volatility in investor sentiment. While Trump hinted at reducing tariffs on Chinese imports, he also announced a sweeping 100% tariff on foreign-produced films, reinforcing concerns about the arbitrary nature of his policy decisions.

These conflicting signals are keeping risk appetite in check, even as optimism surrounding a potential U.S.-China trade thaw continues to linger. Notably, China’s Ministry of Commerce acknowledged ongoing evaluations for renewed trade talks with the U.S., offering a glimmer of hope for the de-escalation of a long-running tariff conflict. But in the absence of concrete outcomes, investors appear hesitant to fully commit to risk-on assets.

Meanwhile, on the economic front, recent U.S. data has painted a more robust picture of underlying activity. The Institute for Supply Management (ISM) reported Monday that the U.S. services sector accelerated in April, with the Services PMI rising to 51.6, beating both the previous reading of 50.8 and the consensus estimate of 50.6. This follows last week’s strong nonfarm payrolls report, which further alleviated recession concerns and gave the U.S. dollar modest support after a two-day losing streak.

Still, the greenback’s recovery has been relatively muted, failing to meaningfully dent gold’s upward momentum. The broader market seems to be positioning cautiously ahead of the highly anticipated Federal Open Market Committee (FOMC) meeting, which kicks off today and concludes on Wednesday. While the Fed is widely expected to hold rates steady, traders are eager for any guidance on the timing of future cuts, especially as inflationary pressures remain sticky and economic signals remain mixed.

Technical Analysis

From a technical standpoint, gold (XAU/USD) continues to exhibit a bullish bias in the medium term, with prices currently consolidating near $3,375, just below a key resistance zone formed around $3,400–$3,408. The metal has held a firm upward trajectory since rebounding off local lows in the $3,300–$3,310 range, where strong buying activity has repeatedly emerged over recent sessions.

At this stage, the market is in what can be described as a bullish accumulation phase, with price action coiling under resistance, typically a sign that buyers are preparing for another upside breakout. As long as gold sustains above $3,360, the probability of an extension toward $3,420—and potentially the $3,500 ATH region—remains elevated.

Notably, the hourly moving average, which was previously acting as a dynamic support throughout the rally, was tested from below during Monday's price action. Bulls successfully reclaimed this level, reinforcing near-term strength. A clean break and close above $3,408, the recent intraday high, would likely trigger a fresh wave of buying and squeeze out lingering shorts, paving the way toward a new leg higher.

Support levels remain well-defined. Immediate intraday support lies around $3,360, followed by a deeper support zone at $3,340–$3,345, which coincides with a key Fibonacci retracement level from the latest upward swing. A sustained break below this area would be the first technical warning sign, potentially exposing the lower-$3,300 zone. However, barring a sharp fundamental shift—such as an ultra-hawkish surprise from the Fed—the path of least resistance remains to the upside.

TRADE RECOMMENDATION

BUY GOLD

ENTRY PRICE: 3370

STOP LOSS: 3320

TAKE PROFIT: 3500

Risk Warnings and Disclaimers

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Adam

Commodity

Summary:

Strong industrial demand, particularly from renewable energy and automotive electrification, coupled with expectations of looser monetary policy in 2025, are creating a solid foundation for silver’s uptrend. Technical and fundamental indicators support a short-term buying strategy with a target of $34-$40 this year....

BUY XAGUSD

Close Time

CLOSED

32.367

Entry Price

33.500

32.000

36.011 -0.351 -0.97%

12.4

Pips

Profit

32.000

32.491

Exit Price

32.367

Entry Price

33.500

Overview

On May 6, 2025, the price of silver (XAG/USD) is currently trading around $32.54/ounce, up $0.276 from the opening price of $32.25. This price is close to the 50-day moving average ($32.73) and above the 200-day moving average ($31.20), indicating that the uptrend is strengthening.

Industrial demand for silver continues to grow, particularly in solar and electric vehicle applications, as global green policies drive the use of the metal. At the same time, forecasts of central bank rate cuts in 2025 reduce the opportunity cost of holding non-yielding assets like silver, facilitating capital flows into the precious metals market.

Market psychology

Investor sentiment is currently quite positive for silver as ETFs and institutional investors increase purchases, benefiting from the shift to safe-haven assets and industrial metals.

Higher-than-average trading volume data suggests improving demand. Optimistic forecasts from experts, such as the expectation that silver could rise 25% by 2025, also add to the buying sentiment. Investors should keep a close eye on monetary policy moves and macroeconomic developments to capitalize on price gains.

Technical analysis

Silver Rises Back Above $32: Solid Short-Term Buying Opportunity_1

On the short-term technical chart, silver is holding above the support zone around $32.20 – $32.30, while approaching the resistance zone near $33.00. Bollinger Bands (20,0,2) are slightly expanding, signaling increased volatility.

RSI is at around 60, indicating that the uptrend has room to grow. MACD remains above the signal line, confirming the positive uptrend. Ichimoku on the H4 chart shows that the price is above the Kumo cloud, reinforcing the medium-term uptrend. If the price breaks through the resistance zone of $33.00, the next target could be $34.50 – $40.00, in line with the growth forecast for 2025.