Gold finally broke its consolidation on downside with a $100 plus week ending with a red candle of $82 completing its pattern target in the week itself. This big move was triggered by a wave of optimism in riskier asset class as air over smooth presidential transition got cleared since Donald Trump finally accepted the fate though he still blames the election as a fraud which won’t matter now unless he is able to prove his point. With just one issue settling, it doesn’t really change the picture which remains ugly and is still on the deteriorating trend as the pandemic continues to rattle the world with some countries now experiencing 4th wave which is quite alarming since most of the highly infected countries are mostly in 2nd wave. Another matter which could flare up is the new blame by China over imported meat from various countries having virus traces as it tries to clear its name. Geopolitical issues remain at large as well with fresh Iran tensions adding to the already large pile. Net net the downside move was largely technical in nature as fundamentals do not support this negative price action keeping the bullish trend intact as pattern support was held yet again. To watch next week – Powell and Mnuchin testimony, Brexit talks, OPEC+ meet and other important economic data.
On the chart –
Gold had a large follow up red candle which not only broke the support of $1848-$1850 but also $1800 as well on back of growing demand of riskier assets as doubts over smooth U.S presidential transition cleared since Donald Trump gave in to the result at last. Though this breakdown might look quite steep but the price took support of the channel which gold is moving in since start of August, thus again the metal stays bullish as the downside pattern target seems to be done in the last week itself. We have 2 scenarios –
1. Gold closed above the support, till this is held it can go to $1804. If this is crossed it can move towards $1823. And if this is taken out it can rally to $1839.
2. Bears took the control at last but still have to do more to change the trend in their favor as the support holds except scalp trading.
Bullish view – Bulls suffered a nasty red week where the immediate support was broken which led to such a fall below $1800. Though bulls now are not in a commanding position unlike previous weeks, still not all is lost as the channel support holds and till it is held bullish trend remains intact as fundamentally nothing much has changed with situations actually worsening further which should keep the downside on check.
Bearish view – Bears finally had their say after many weeks but the joy was limited as the downside target was likely achieved and the price rebounded after hitting the channel low/support. For bears to capture the trend they need to break this channel on the downside.
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 $1804 for the targets of $1823 and $1839 with a stop loss placed below $1793. Longer term target $1857.
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 large follow up red candle which not only broke the support of $1848-$1850 but also $1800 as well on back of growing demand of riskier assets as doubts over smooth U.S presidential transition cleared since Donald Trump gave in to the result at last. Though this breakdown might look quite steep but the price took support of the channel which gold is moving in since start of August, thus again the metal stays bullish as the downside pattern target seems to be done in the last week itself. We have 2 scenarios –
1. Gold closed above the support, till this is held it can go to $1804. If this is crossed it can move towards $1823. And if this is taken out it can rally to $1839.
2. Bears took the control at last but still have to do more to change the trend in their favor as the support holds except scalp trading.
Bullish view – Bulls suffered a nasty red week where the immediate support was broken which led to such a fall below $1800. Though bulls now are not in a commanding position unlike previous weeks, still not all is lost as the channel support holds and till it is held bullish trend remains intact as fundamentally nothing much has changed with situations actually worsening further which should keep the downside on check.
Bearish view – Bears finally had their say after many weeks but the joy was limited as the downside target was likely achieved and the price rebounded after hitting the channel low/support. For bears to capture the trend they need to break this channel on the downside.
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 $1804 for the targets of $1823 and $1839 with a stop loss placed below $1793. Longer term target $1857.
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 $1823
Comment:
Second long target met at $1839