Gold: Mid-Long Term Analysis 1W, 1M (Jun 04)

X Force Global Analysis:


Gold has been on an extreme bullish rally for the past few years, demonstrating a parabolic trend on the weekly chart. In this analysis, we explore the weekly and monthly charts to determine the mid-long term projections for Gold.

Weekly Chart

- The first thing we can notice on the weekly chart is the extended parabolic trend
- Gold has been on an immense bullish rally for a while, reaching points of bullish momentum that is unsustainable
- Parabolic trends show huge downside after prices break and close below the trend line support
- The next thing we spot is a textbook bearish divergence
- Prices are forming higher highs, while the Relative Strength Index (RSI) forms lower highs
- The Moving Average Convergence Divergence (MACD) also shows weakened bullish momentum, with a potential death cross formation

Monthly Chart

- Zooming out on the monthly chart, we see a 'U' shaped trend line
- The current monthly candle has been rejected by the 0.786 Fibonacci retracement resistance
- Based on the analysis on the weekly chart, should we see a downtrend initiated by a break of the parabolic trend, we could see a potential cup and handle pattern
- The descending parallel channel - the handle of the pattern - would serve as a phase of consolidation before taking gold to historical highs
- It's also important to note that the RSI is at overbought levels, and the MACD is showing the bullish trend slowly lose momentum


What We Believe

While Gold's bullish trend gained a lot of momentum due to the Corona Virus (COVID-19), with the stock market bouncing back to record high levels again, and Gold's technicals demonstrating signs of a big correction, we believe that Gold's outlook for the mid term is quite bearish. However, over the long run, Gold will always have its place among everyone's portfolios, and technicals for also suggest a bullish probability for the long term as well.

Trade Safe.