Gold had another red week with $1700 also getting breached on closing basis as dollar continued to pile on gains due to inflation fears/rising yields but the move was highly predictable with the low almost touching the channel/flag bottom. Yet again the stimulus news as in the senate passing the stimulus bill came out in the weekend which should kind of repeat last week’s moves with gold expected to gap up along with equities as this development should prompt the dollar to reverse gears back to the downside again though the finale (the bill becoming the law) is expected before 14th March which should keep the related asset classes volatile. The pandemic related uncertainty remains at highs as the cases across the globe are on the rising trend along with increased death rate even after the rollout of vaccines which definitely is a concerning issue as it continues to impact economic recovery/growth. In such a scenario where the uncertainty still looms gold remains the safest haven amongst all asset classes. To watch next week – Stimulus, ECB meeting, inflation figures and other important economic data.
On the chart –
Gold had a poor outing again where it failed to stay above the $1700 mark broadly due to an increased dollar though the path was highly predictable since it remains in the channel/flag. The bottom of the flag/channel is likely hit or might get retested again which should prompt a notorious reversal since the price movement happening in yellow metal is largely technical in nature given the current downside is not at all fundamentally supported. The flag remains intact with a high possibility of a reversal if the low stays put else it might travel a bit more inside the flag on the downside as well though the stimulus bill getting signed and becoming the law should be enough for providing the push for a reversal if not happened till yet. We have 2 scenarios –
1. Gold closed above the support, till this is held it can go to $1716. If this is crossed it can move towards $1727. And if this is taken out it can rally to $1740.
2. Bears remained in action again as the price continued to decline but they were unable to break the flag which keeps the scalps active only and not positional.
Bullish view – Bulls lost $1700 as well but the move was highly predictable as the price bounced from the channel/flag low keeping the bullish trend alive. The bulls have another weekend on their name as the stimulus closes in to become the law which should not augur well for dollar and like last week provide the push to the yellow metal through a gap up. For bulls to stay in the driving seat they need to defend the channel/flag from getting broken.
Bearishness remains on the sidelines as the bullish pattern stays intact.
On larger terms, gold remains bullish and prices are expected to head higher.
Possible trades are on both sides but mainly on upside, gold can be bought above $1705 for the targets of $1716 and $1727 with a stop loss placed below $1695. Longer term target $1740.
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 poor outing again where it failed to stay above the $1700 mark broadly due to an increased dollar though the path was highly predictable since it remains in the channel/flag. The bottom of the flag/channel is likely hit or might get retested again which should prompt a notorious reversal since the price movement happening in yellow metal is largely technical in nature given the current downside is not at all fundamentally supported. The flag remains intact with a high possibility of a reversal if the low stays put else it might travel a bit more inside the flag on the downside as well though the stimulus bill getting signed and becoming the law should be enough for providing the push for a reversal if not happened till yet. We have 2 scenarios –
1. Gold closed above the support, till this is held it can go to $1716. If this is crossed it can move towards $1727. And if this is taken out it can rally to $1740.
2. Bears remained in action again as the price continued to decline but they were unable to break the flag which keeps the scalps active only and not positional.
Bullish view – Bulls lost $1700 as well but the move was highly predictable as the price bounced from the channel/flag low keeping the bullish trend alive. The bulls have another weekend on their name as the stimulus closes in to become the law which should not augur well for dollar and like last week provide the push to the yellow metal through a gap up. For bulls to stay in the driving seat they need to defend the channel/flag from getting broken.
Bearishness remains on the sidelines as the bullish pattern stays intact.
On larger terms, gold remains bullish and prices are expected to head higher.
Possible trades are on both sides but mainly on upside, gold can be bought above $1705 for the targets of $1716 and $1727 with a stop loss placed below $1695. Longer term target $1740.
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 $1716
Comment:
Second long target met at $1727