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Bullion begins month with negligible losses at 15-month highs

FX:XAUUSD   Gold/U.S. Dollar
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Bullion begins month with negligible losses at 15-month highs but trend bullish bias

Technical Inference:

Yellow metal seems to have taken a halt in previous upswings at 1296.54 levels which is a fresh 15-month’s highs (see red colored circle).

The precious metal has been bouncing consecutively especially after breaking resistance at 1250.75 levels with a sentiment of safe haven among all asset classes from last couple of weeks but as stated in our earlier.

RSI: As the pair hits at the 15 months highs prices jumping way beyond Bollinger bands while RSI evidences a slight divergence to the previous rallies but in long term it’s been indicative of strength in bullish trend (Currently, trending above 66 while articulating).

Stochastic sends indecisive note:  As the bullish price behavior losing momentum , slow stochastic curve has been in state of indecision but slightly favors bears as the selling pressures mounting and momentum is intensifying that is coupled with the standpoint offered by RSI .

Although there is no perfect %D line crossover, these curves reached well above 80s which is overbought zone bolstering selling pressures, (Currently on daily terms, %D line is at 92.3233 and %K at 94.3513 while articulating).

Current prices have jumped and remained well above DMAs consistently and MACD is also signaling uptrend continuation.

Monthly observation: Thus far, the price of precious metal has been surpassing all major resistances decisively in February series, 1st at 1200.43 and at 1225.60 where demand was seen more than supply and for now (April month series) has acted these levels as a supports at the same levels, if it does not mange to hold these levels then 1250 is quite certain event.

Bullish trend substantiated by volumes, leading as well as lagging indicators, testing now resistance at 1294.50.

XAU/USD Option Trading Tips:

So far we saw upswings, as the leading oscillators little indecisiveness we may not see the momentum in the same uptrend at this juncture, and may take a halt and some minor price declines are possible, so we recommend credit call spreads with 1W (1%) OTM shorts and 1M (1%) ITM longs on both speculative as well as hedging grounds.

Should the underlying commodity price keeps falling upto 1% below from spot levels; the gain in the value of the short OTM strikes position will be able to offset the drop in revenue from the sale of the underlying and cushion hedging cost on long calls.
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