Gold made a new high which was earlier seen in the month of July gaining $26 for the week also registering the highest weekly gain in the second half of this financial year. Prices were aided by an influx of fundamental news as well as a weakening dollar on account of a surge in demand of the yellow metal as risk-off trade continues to unfold. A closing above the previous high does signal more bullishness for the metal ahead as the month remains filled with important events prompting a refuge in this asset class.
On the chart –
Gold had a good outing after many weeks as a large green bar was created breaking through crucial points. Though such a closing is seen as a big positive but the truth yet remains that gold is still moving inside the flag, a break of which will define the actual course. We have 2 scenarios –
1. Gold’s closing above $1243 suggests it has steam to move further ahead, till the level is held it can move to $1251. Once this is crossed it can head higher to $1260. If this is taken out it can travel till $1273 testing the breakdown trendline.
2. Short trades become increasingly important as gold makes it way to top of the flag as a failure to breakout will result in downward movement back inside the flag.
Bullish view – Bulls stomped their way towards new high also touching the psychological mark of $1250 as they closed well above the resistance and the previous high. Many factors come to the aid of bulls as political and fundamental events take center stage echoing the need of risk off trades. For bulls $1260 looks increasing close given the trend and if the flag is broken on the upside gains will get wings.
Bearish view – Nothing much for the bears except for the fact that gold is nearing the top of the flag and a reversal might be on the cards if it fails to breakout.
On larger terms, Gold still remains inside the flag/channel and prices are expected to be rangebound unless it breaks out.
Possible trades are on both sides, gold can be bought above $1251 for the targets of $1260 and $1265 with a stop loss placed below $1243. Longer term target $1273.
Short trades come to play once the flag top is reached which can see reversal to $1251 and $1243.
On the chart –
Gold had a good outing after many weeks as a large green bar was created breaking through crucial points. Though such a closing is seen as a big positive but the truth yet remains that gold is still moving inside the flag, a break of which will define the actual course. We have 2 scenarios –
1. Gold’s closing above $1243 suggests it has steam to move further ahead, till the level is held it can move to $1251. Once this is crossed it can head higher to $1260. If this is taken out it can travel till $1273 testing the breakdown trendline.
2. Short trades become increasingly important as gold makes it way to top of the flag as a failure to breakout will result in downward movement back inside the flag.
Bullish view – Bulls stomped their way towards new high also touching the psychological mark of $1250 as they closed well above the resistance and the previous high. Many factors come to the aid of bulls as political and fundamental events take center stage echoing the need of risk off trades. For bulls $1260 looks increasing close given the trend and if the flag is broken on the upside gains will get wings.
Bearish view – Nothing much for the bears except for the fact that gold is nearing the top of the flag and a reversal might be on the cards if it fails to breakout.
On larger terms, Gold still remains inside the flag/channel and prices are expected to be rangebound unless it breaks out.
Possible trades are on both sides, gold can be bought above $1251 for the targets of $1260 and $1265 with a stop loss placed below $1243. Longer term target $1273.
Short trades come to play once the flag top is reached which can see reversal to $1251 and $1243.