ICmarkets

Our take on the recent Gold movements.

FX:XAUUSD   Gold/U.S. Dollar
178 0 2
Weekly Timeframe: The weekly timeframe shows that price is now trading within a weak-looking weekly supply area coming in at 1255.2-1226.1. The reason we believe this area to be weak is simply because price has already visited this area once already on the 08/12/14, consequently decreasing the chances of a reaction being seen here. What is more, notice that the first reaction did not form a lower low which tells us that that Gold’s selling pressure may be diminishing.

Daily Timeframe: Yesterday’s trading action saw price pierce above a daily supply area at 1238.1-1227.7 (located just within the aforementioned weekly supply area), which likely stopped out the majority of traders attempting to trade short. This move has likely cleared the path north towards a daily Quasimodo resistance level seen at 1249.4, and is in effect the last line of defense for the weekly supply area mentioned above.

4hr Timeframe: The 4hr timeframe shows that price continued north towards the 4hr supply area seen at 1244.5-1240.1, as reported it may do in the previous analysis. Considering how high price was driven into this 4hr supply area, we feel that there’s a good chance most of the supply i.e. sell orders have likely been consumed. Therefore, in the event that price can hold above the minor 4hr swap level at 1222.9, we feel that there’s a good chance price can rally towards 1249.4, the aforementioned daily Quasimodo resistance level.

With the above taken into consideration, we have no interest selling Gold             at this time. We are however interested in buying around the 1224.0 mark just above the aforementioned 4hr swap level, with a target of 1248.88 in mind. We would advise waiting for lower timeframe confirmation here though as price could just as easily ignore this level and continue trading south towards a 4hr demand area coming in at 1206.1-1210.6 (located deep within a daily demand area seen at 1204.4-1216.5).

Current buy/sell levels:

• Buy orders: 1224.0 (Predicative stop-loss orders seen at: dependent on where one confirms this level).

• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).
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