Looking down to the , gold has rallied for three consecutive days, following its bounce from demand at 1234.6-1244.9. In the event that the bulls remain in a dominant position from here, we could see price bid up to resistance at 1301.5 (located within the aforementioned weekly ).
Jumping across to the H4 chart, bullion’s recent advance forced price above a supply at 1268.1-1265.0 (now an acting demand base), and as a result, allowed price to connect with supply coming in at 1277.1-1272.4.
For those who follow our reports on a regular basis you may recall us mentioning that this is a tricky market to read at the moment. And, in all honesty, this is still the case as far as we’re concerned. However, the space seen on the H4 chart beyond the current H4 supply area up to daily resistance at 1301.5 is very attractive. The only problem is, as we highlighted in yesterday’s analysis, that a break above the H4 supply would still be considered a risky buy as by that point price would be trading within striking distance of the weekly mentioned above at 1307.4-1280.0. While we agree with this, there’s still a chance price could effectively rally up to the daily resistance line upon breaking above the current H4 supply.
Therefore, after some thought, we have decided to re-evaluate our position in this market. Should price close beyond the current H4 supply and retest this boundary as demand, followed up with a reasonably sized H4 bull candle, we might, dependent on the time of day, look to go long from here, targeting the 1301.5 neighborhood.
Levels to watch/live orders:
• Buys: Watch for a close above the H4 supply at 1277.1-1272.4 and look to trade any retest seen thereafter (H4 close required prior to pulling the trigger).
• Sells: Flat (Stop loss: N/A).