ICmarkets
Long

Interesting price action printing on Gold traders...

FX:XAUUSD   Gold/U.S. Dollar
177 0 0
Coming at you directly from the weekly chart this morning, the yellow metal is seen rebounding from not only the broken supply (now demand) at 1205.6-1181.2, but also the recently broken weekly wedge resistance taken from the high at 1485.3. Climbing down into the pits of the daily timeframe shows us that the buyers and sellers continue to battle for position around demand chalked up at 1205.6-1199.9. Yesterday’s action             , as you can see, also printed a nice-looking bullish inside candle pattern, which could potentially signal direction today.

Looking at the H4 chart, however, the buyers and sellers appear to be confined within a bearish pennant formation (1190.8/1216.8). Traders may want to be careful trading this pattern as the majority will be looking for a continuation move here. Nevertheless, with what we’ve noted on the higher timeframes (see above) we have absolutely no interest in selling the break of this pattern! Instead, what we’re currently watching for is a sustained move above H4 resistance at 1212.2. This would likely open the flood gates up to H4 supply at 1239.9-1235.7 and at the same time confirm bullish strength from the higher timeframe zones discussed above.

To trade this potential move, however, we’d need to see price retest 1212.2 as support together with a lower timeframe buy setup – a break of supply, a break of a trendline or a collection of buying tails planted at or very close to the traded level is what we generally look for.

Levels to watch/live orders:

• Buys: Watch for offers to be consumed around 1212.2 and look to trade any retest seen thereafter (lower timeframe confirmation required).
• Sells: Flat (Stop loss: N/A).
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