BEST TRADES THIS WEEK: GOLD, EUR/AUD, AUD/NZD And More!

James LNE analyzes five key trade setups for the week ahead, with a primary focus on shorting gold due to rising bond yields and unfavorable positioning. He also examines cautious long opportunities in AUD/NZD alongside bearish setups in EUR/AUD, natural gas, and EUR/CAD, using technical structure, institutional positioning data, and seasonal patterns to construct his thesis.

Gold Shorts in Focus: Why Rising Yields Are Killing the Bull Case

The case for shorting gold has crystallized around a simple but powerful dynamic: opportunity cost. With 30-year US Treasury yields now exceeding 5% and the 10-year yield rapidly approaching that threshold, investors face a stark choice. Bonds now offer a tangible 5% return with minimal risk, while gold—a non-yielding asset—provides no income stream whatsoever. This fundamental shift in the risk-reward calculus has made gold materially less attractive on a relative basis.

The technical and sentiment backdrop reinforces this bearish view. The Watchtower's proprietary scoring system assigns gold a reading of 40, with the US dollar at 62, reflecting an 80% market probability of a Federal Reserve rate hike on September 16. Retail traders, meanwhile, are crowded into long positions at 84%—a contrarian signal that typically precedes mean reversion. Seasonally, mid-September through early October has historically been a weak period for gold across 5-, 10-, and 15-year averages. The price forecast model shows a 14-day downside bias, and the Edge Finder score has collapsed from a strong bullish reading to neutral at +2, signaling technical deterioration.

Despite this short-term bearish setup, bank research remains net bullish for gold's longer-term trajectory. Credit Agricole targets 5,000 by year-end and 5,500 by 2027, while UniCredit sees 4,800. This divergence between near-term weakness and structural bullishness suggests a tactical short with a trailing stop—allowing the trade to run while preserving optionality for a reversal.

AUD/NZD: Bullish Technicals Meet Overbought Conditions

The Australian dollar versus New Zealand dollar has staged a remarkable 15% rally with almost no meaningful pullback, breaking out of a 14–15 year consolidation range. The Edge Finder registers a bullish +12 score, driven by strong economic growth readings across GDP, manufacturing, services PMI, retail sales, and consumer confidence. Retail traders remain crowded short at only 18% long, while institutions are 70% long on the Australian dollar—a favorable setup for continuation.

However, the market is technically extended. Weekly Bollinger Bands show extreme overbought conditions, and price has rallied without the corrective structure typically required for healthy trends. A Fibonacci retracement from the recent low to high aligns the 61.8% level with previous daily highs, creating a logical pullback zone. The optimal entry would be a break-retest-rejection pattern into this Fibonacci zone and moving averages, followed by a resumption higher. Given the extended nature of the move, aggressive trailing stops are essential to protect gains.

EUR/AUD: Bearish Trend Meets Support—Short Setup Emerging

The euro-Australian dollar pair is in a well-established downtrend but has recently found support at a key daily and weekly level. The Edge Finder delivers a strong bearish -12 reading, led by economic growth and inflation factors, with retail sentiment and technicals also aligned to the downside. A Fibonacci drawn from the recent high to low places the 50% retracement in a zone that aligns with previous structural support on the left side of the chart.

The setup is a textbook break-retest-rejection pattern. Once price breaks below the daily and weekly support level, a retest into the Fibonacci zone and previous structure should trigger the next leg lower. Weekly moving averages appear primed for a bearish crossover, reinforcing the directional bias. Target levels extend toward 1.527 and potentially lower to 1.48.

Natural Gas and EUR/CAD: Lower-Risk Shorts With Asymmetric Payoffs

Natural gas displays a healthy bearish trend with price repeatedly failing to break above the 200-period moving average. The Edge Finder scores -7, with all three economic pillars—labor, inflation, and growth—aligned bearishly. A Fibonacci retracement into the 50% level aligns with previous support, setting up a break-retest-rejection continuation lower. The asymmetric risk is attractive: significant downside potential against a well-defined daily support level that can serve as a stop-loss anchor.

EUR/CAD presents a messier technical picture with moving averages struggling to establish a trend, yet lower highs are forming on the daily timeframe. The Edge Finder registers -8, again with all three pillars bearish. The Fibonacci retracement zone aligns with previous structure, offering a logical entry point on a break-retest-rejection. Given the choppy nature of the pair, position sizing must be conservative, with stops at the daily high and targets toward 1.57.