Interesting P.A setting up on Gold here traders...

FX:XAUUSD   Gold Spot / U.S. Dollar
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Coming at you directly from the weekly timeframe this morning shows that Gold             remains nibbling at the underside of weekly supply drawn from 1205.6-1181.2. This zone, as we mentioned in our previous weekly report, is a perfect barrier to look for shorts back down to 1157.4 – now acting support. It not only converges with a bearish Harmonic AB=CD pattern (1199.4), but also with the underside of a long-term trendline extended from the high 1488.0.

Turning our attention to the daily timeframe, the action here is now fixed between supply coming in at 1187.6-1179.6, and a swap demand area seen at 1169.8-1154.7.

Winding down to the 4hr timeframe, however, we can see that during the course of yesterday’s sessions, Gold             rallied from the swap demand area at 1169.8-1162.5, reaching highs of 1180.6 on the day. Assuming that Gold             continues to rally, surpassing the swap resistance level at 1187.5 and up to supply at 1205.6-1200.4, we’d have no hesitation in shorting at market from this zone. Here’s why:

1. Located deep within both weekly and daily supply (see above).
2. Also converges nicely with the aforementioned weekly Harmonic AB=CD bearish pattern (see above).
3. In addition to point two, there is a potential 4hr Harmonic AB=CD bearish pattern forming with a completion zone seen in green at 1202.3/1207.1.

Of course, the above said 4hr supply zone is a little way off for now, but is certainly something to keep your eye on! In regard to today’s battle lines, we are once again watching the swap demand area at 1169.8-1162.5 (located within a daily swap demand area at 1169.8-1154.7), and also the swap resistance level at 1187.5. For trades taken at either of the above said levels, we would advise waiting for lower timeframe confirmation due to the following:

1. A trade short from 1187.5 is susceptible to a fakeout as we saw last Thursday.
2. The swap demand base at 1169.8-1162.5 may have held price once already but that does not mean it will happen again. Be prepared for a fake below here, which, as a result will see price trade very deep within the daily swap demand base mentioned above at 1169.8-1154.7.

Levels to watch/ live orders:

• Buys: 1169.8-1162.5 Tentative – confirmation required (Stop loss: dependent on where one confirms this zone since a fake lower could very well take place).
• Sells: 1187.5 Tentative – confirmation required (Stop loss: dependent on where one confirms this level) 1199.5 (Stop loss: 1208.3).

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Comment removed
ICmarkets Stockman
Thanks for letting us know Stockman. Very interesting.
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