ICmarkets
Short

Our thoughts on Gold

FX:XAUUSD   Gold/U.S. Dollar
170 0 2
Kicking off our analysis with a look at the weekly chart this morning shows very little direction in this market at the moment. To the upside, price is seen capped by supply drawn from 1307.4-1280.0, while to the downside demand at 1205.6-1181.2 continues to hold the yellow metal higher. As such, we recommend keeping an eyeball on both of these zones in the coming days.

On the other side of the field, the buyers and sellers on the daily chart are seen battling for position at the underside of supply coming in at 1270.8-1257.5. This is effectively the third visit to this zone, which may end in price driving above this area to connect with resistance lurking at 1283.4 (positioned within the above said weekly supply).

With the higher-timeframe picture in mind, here is what we see on the H4 chart:

• Price defending resistance coming in at 1256.2 – essentially the lower edge of daily supply at 1257.5.
• A relatively nice-looking Quasimodo resistance level positioned just above the current resistance sitting at 1259.7.
• Points one (1266.7) and two (1262.6) show what we believe to be consumption wicks i.e. little active supply left within this region.

Therefore, given the relatively soft response seen from the current H4 resistance level and very little of interest above the H4 Quasimodo resistance at 1259.7, we’ll be looking to short 1259.7 today as this remains the only fresh area. Be that as it may, we would not feel comfortable selling here without some sort of lower timeframe confirmation (a break/retest of demand, a trendline break/retest or even simply a collection of selling wicks around a lower timeframe resistance), since let’s not forget that the weekly chart shows room for price to rally north up to the aforementioned weekly supply. The first take-profit target from 1259.7 will be dependent upon the approach to our sell line.

Levels to watch/live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: 1259.7 Tentative – confirmation required (Stop loss: dependent on where one confirms this level).
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