Despite an eventful summer and an almost 6% slide in gold price over the past three months, gold vols under-delivered across strikes and tenors.
Technically, on daily plotting, Gold ( XAUUSD price), has formed “dragonfly doji” at $1,173.92 levels.
Consequently, bulls, have attempted to spike above DMAs ,on the contrary, and patterns have popped-up at stiff resistance of at 1,211.98 levels (refer ).
Mild bull-swings, for this month, are not backed by both trend & momentum indicators (refer monthly chart).
Bears in the intermediate trend resume after failure swings at the stiff resistance & most likely to hit 20-month lows. pattern has formed with top 1 at $1,375.04 and top 2 at $1,365.95 levels (refer monthly plotting). As a result, the current price on this timeframe, has slid below EMAs with crossover. Amid this journey, bears have shrugged-off the occurrence of pattern.
After 3-years of consolidation phase, trend now seems exhausted again after back-to-back patterns at the stiff resistance levels, the major downtrend resumes upon & crossovers (refer monthly chart).
Hence, on trading grounds, one can buy 1m at the money -0.49 delta put options and on hedging grounds, we advocate squaring off any long positions, instead, initiate shorts in gold contracts for Dec’18 delivery at spot reference of $1,194/oz.
Currency Strength Index: FxWirePro's hourly USD spot index is inching towards 42 levels (which is ), while articulating at 09:42 GMT .