Why did Gold spike up?
Gold reached a historic peak on Wednesday, March 20, 2024, following remarks by Federal Reserve Chairman Jerome Powell regarding the possibility of three interest rate cuts throughout the year. However, it's important to note that the exact timing and extent of the rate adjustment remain uncertain, pending further evaluation of incoming data on key economic indicators such as inflation and employment figures in the United States. The concept of a wick fill scenario, wherein price retracement aligns with anticipated rate hikes, will only materialize if forthcoming data in the coming weeks supports and favors a tightening monetary policy stance.
What is a Wick Fill?
In gold trading, the "wick fill theory" refers to a concept used by traders to interpret candlestick chart patterns and potential price movements. When a candlestick has a long upper wick, it indicates that the price reached higher levels during the trading period but retreated back to close near the opening price. The wick fill theory suggests that if the subsequent price action fills or covers the entire length of the upper wick, it may signal a reversal or continuation of the current trend.
For example, if gold experiences a significant upward movement resulting in a long upper wick, indicating that buyers pushed the price higher but were unable to sustain those levels by the close of the trading period, traders observing the wick fill theory would closely monitor the subsequent price action. If the following trading period sees the price retracing and filling the entire upper wick, moving back to the high of the previous candle, it may suggest bullish momentum and potential continuation of the uptrend.