Gold: Technical outlook and review...

FX:XAUUSD   Gold Spot / U.S. Dollar
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Weekly view: From a weekly standpoint, the trend on Gold             is still firmly south, and will remain that way in our opinion until price closes above the weekly trendline resistance extended from the high 1488.0. At the time of writing, however, we can see that the bulls were clearly on form last week, consequently forcing price to close (1224.2) the week above weekly supply seen at 1223.1-1202.6. Assuming that the buyers can continue with this tempo into this week, it’s likely we may see price shake hands with the weekly trendline resistance just mentioned above.

Daily view: The daily timeframe shows that the recent surge of buying commenced from daily support seen at 1178.3. The move from here aggressively took out the daily supply area coming in at 1215.0-1204.5, and continued north to test a fresh daily supply area positioned at 1236.6-1226.9. The reaction from this daily supply zone suggests to us that the sellers have no interest in taking things lower at this time. It will be interesting to see what the 4hr scale has to report…

4hr view: Thursday’s sessions saw price rebound from a minor 4hr swap level coming in at 1212.7, and eventually spike above a 4hr supply area seen at 1225.2-1220.5 which has held firm on several occasions since the 17th February 2015. This move above this zone likely triggered in a ton of buy stops from traders both trying to fade this 4hr supply zone and also buy the breakout. Going into Friday, specifically the London session, price sold off and once again rebounded from the 4hr swap level at 1212.7. It was only once the U.S traders arrived at their desks did we see a push higher up to the extremes of the recently pierced 4hr supply area.

With all of the above taken into account, here is how we see today and possibly the rest of the week’s action playing out… The stops taken from above the 4hr supply area at 1225.2-1220.5 has likely paved the way north for an attack of 4hr supply seen at 1236.6-1230.6 (located deep within the daily supply area mentioned above at 1236.6-1226.9).
For us to take advantage of this potential move north, however, price would need to sell off and touch gloves with the green buy zone seen at 1216.3/1210.9 as per the red arrows. Supporting a trade long from here is the recent higher-timeframe weekly close above weekly supply, but against us is potential downward pressure from the current daily supply area just mentioned (see above for levels).

The risk/reward from this green area to the upper 4hr supply area at 1236.6-1230.6 is quite good. If we bought at current prices though, that risk/reward ratio drops considerably, hence the reason why we need to wait for a market sell off. Assuming that price reaches our green buy zone sometime this week before hitting our target 4hr supply, one could, if they so wished simply place a pending buy order at the top-side of our green area around 1216.7 area, with a stop set below at 1210.3. Nonetheless, if you’re conservative like us, you may choose to wait for the lower-timeframe buyers to establish support within this higher-timeframe zone before jumping in.

Levels to watch/live orders:

• Buys:1216.3/1210.9 (Predicative stop-loss orders seen at: 1210.3).

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

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