Jobless Claims Dip, but XAUUSD Shows Signs of a Dead Cat Bounce – What Lies Ahead?

Weekly jobless claims in the United States dipped slightly to 217,000 for the week ending November 4, yet continuing claims reached their highest point since April. This suggests that, while new layoffs remain limited, individuals who are unemployed are facing increased difficulty in securing new employment. Despite the decline in jobless claims, XAUUSD saw a 1% increase. This rise can be attributed to the figure surpassing expectations by 2,000. Following this development, the price exhibited sideways movement with a minor retracement, concluding Wednesday's trading session with a doji candle on the daily chart. This signals a pause in bearish momentum, as sellers take a break from pushing XAUUSD to lower levels.

XAUUSD Price Action

In the 1-hour timeframe, various bullish reversal candlestick patterns, including Hammers and Bullish Engulfing, emerged. During Thursday's release of Initial Jobless Claims data, a Bullish Engulfing pattern formed, initiating a bullish rally that broke above the EMA 50. Despite this recent upward movement, the overall trend, as indicated by the EMA 50 and 200, remains bearish, with the EMA 50 situated below the EMA 200. This recent surge could potentially be a temporary recovery (dead cat bounce) if the price drops below the critical support level marked by a red horizontal line around 1954.

Examining the RSI, it breached the 60 level during the brief bullish rally and has since maintained a position above the 40 level. A dip below 40 could trigger panic selling. The MACD is currently in a bullish correction, with the histogram just above the 0 level. If both the signal line and the histogram cross below 0, it might lead to a further decline, testing the strength of the recent Bullish Engulfing pattern at 1951-1944. Absent a bullish response in that price range, XAUUSD could see a further descent to 1940.

Key Economic Releases to Watch Today

GBP,  GDP (YoY) (Q3)

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CNY, New Loans

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