ICmarkets
Long

Looking for H4 supply at 1277.1-1272.4 to be consumed today...

FX:XAUUSD   Gold/U.S. Dollar
192 0 7
Recent action shows that the yellow metal extended its bounce north from H4 demand at 1260.2-1263.8 up to the H4 supply base coming in at 1277.1-1272.4, where the buyers and sellers are currently seen battling for position. This recent advance can likely be credited to safe-haven buying amid uncertainty surrounding the US equity market, and speculation that demand will be boosted by the Diwali festival in India, the world’s largest bullion-consuming country after China, according to Bloomberg.

To explain our thoughts regarding this market, we feel it’s best to begin from the top. The weekly candle is now within shouting distance of testing the underside of a resistance area drawn from 1307.4-1280.0. Our read on the daily chart shows that demand at 1234.6-1244.9 is currently providing this market with support. In the event that bullion continues to be favored here, we may see price shake hands with resistance at 1301.5, seen located relatively deep within the above mentioned weekly resistance area.

A break above the H4 supply at 1277.1-1272.4 is something our team is interested in seeing. The reason being is that beyond this barrier, the pathway north on the H4 is clear up to the aforementioned daily resistance. As such, should price retest this boundary as demand (after a close higher) followed by a reasonably sized H4 bull candle, one could look to go long from here targeting the daily level. However, do remain aware that by entering long from here, even with the confirmation of a H4 bull candle, you’re effectively buying directly into a weekly resistance area.

Our suggestions: Buying above the current H4 supply is, we agree, a risky trade. The buyers, however, are clearly growing in confidence here, and could potentially push prices up to the daily resistance given the river of space seen beyond current H4 supply area.

Levels to watch/live orders:

• Buys: Watch for a close above the H4 supply at 1277.1-1272.4 and then look to trade any retest seen thereafter (H4 bullish close required prior to pulling the trigger).
• Sells: Flat (Stop loss: N/A).
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