Gold finally had a good week where it closed above the $1700 comfortably after testing the lows of the channel/flag which to a great extent suggests a near term bottom if not a reversal. A lower dollar contributed to the rise though higher yields remain a botheration as inflation fears still loom around while this co-relation of the inflation with higher dollar and a lower gold might not work all the time given the other fundamentals issues sweeping the globe again as in the rising covid cases with increased death rate which could hinder economic recovery as most countries are reimposing strict measures and lockdowns to curb the spread. The virus is almost mirroring the last year when it started to multiply even after various vaccination drives which raises confidence issues over the efficacy of the vaccines while fresh side effects complicate the matter even more. The current situation does act as a perfect recipe for higher gold price as fears of an extended economic uncertainty/disruption looms again given the spiraling virus cases world wide. To watch next week – U.S Fed meet, Bank of England and Bank of Japan policy meet, earnings and other important economic data.
On the chart –
Gold had a successful green week after 3 red candles quietly suggesting a near term bottom formation as the price bounced from the lows of the channel/flag which itself oozes bullishness. This reversal is more of a text book compared to the present volatility(false breaks) seen across asset classes as the move was widely expected given its simplicity/ease to chart. The flag low has been tested and the price is now expected to test the top or even finally break the flag on the upside altogether. We have 2 scenarios –
1. Gold closed above the support, till this is held it can go to $1727. If this is crossed it can move towards $1740. And if this is taken out it can rally to $1755.
2. Bears failed again missing the opportunity to change the trend in their favor as the flag/channel remains intact except the evergreen scalp trades.
Bullish view – Bulls breathed a sigh of relief as the price reversed after hitting the flag/channel bottom which although was widely expected. Bulls not only did manage to protect the flag but they surged higher above the $1700 comfortably even on back of higher yields as technicals played its part along with the worsening fundamentals as covid cases are on the rise again with increased death rate forcing many countries to reimpose stricter measures and lockdowns to contain the spread. For now the technicals have turned bullish with price expected to be on the uptrend till the flag/channel low holds.
Bearishness yet again failed to grab any attention as the flag/channel remains intact.
On larger terms, gold continues to remain bullish and prices are expected to head higher.
Possible trades are on both sides but mainly on upside, gold can be bought above $1731 for the targets of $1740 and $1755 with a stop loss placed below $1721. Longer term target $1771.
Dips towards support (and breakout region) can be used to create longs for the above mentioned targets.
Shorts can be useful for scalp trades only.
On the chart –
Gold had a successful green week after 3 red candles quietly suggesting a near term bottom formation as the price bounced from the lows of the channel/flag which itself oozes bullishness. This reversal is more of a text book compared to the present volatility(false breaks) seen across asset classes as the move was widely expected given its simplicity/ease to chart. The flag low has been tested and the price is now expected to test the top or even finally break the flag on the upside altogether. We have 2 scenarios –
1. Gold closed above the support, till this is held it can go to $1727. If this is crossed it can move towards $1740. And if this is taken out it can rally to $1755.
2. Bears failed again missing the opportunity to change the trend in their favor as the flag/channel remains intact except the evergreen scalp trades.
Bullish view – Bulls breathed a sigh of relief as the price reversed after hitting the flag/channel bottom which although was widely expected. Bulls not only did manage to protect the flag but they surged higher above the $1700 comfortably even on back of higher yields as technicals played its part along with the worsening fundamentals as covid cases are on the rise again with increased death rate forcing many countries to reimpose stricter measures and lockdowns to contain the spread. For now the technicals have turned bullish with price expected to be on the uptrend till the flag/channel low holds.
Bearishness yet again failed to grab any attention as the flag/channel remains intact.
On larger terms, gold continues to remain bullish and prices are expected to head higher.
Possible trades are on both sides but mainly on upside, gold can be bought above $1731 for the targets of $1740 and $1755 with a stop loss placed below $1721. Longer term target $1771.
Dips towards support (and breakout region) can be used to create longs for the above mentioned targets.
Shorts can be useful for scalp trades only.
Trade active
Comment:
First long target met at $1740