Weekly closing price: 1255.3
Weekly view: The gold market dropped sharply last week, resulting in price taking out the at 1307.4-1280.0 (now acting resistance). Given the velocity of the move, this could set the stage for a continuation move south this week down to the logged in at 1205.6-1181.2, which happens to converge nicely with two supports (1130.1/1071.2).
Daily view: While the weekly picture is currently showing scope for further downside this week, the daily are interacting with demand. As you can see from the chart, price fed off a smaller (less obvious) demand at 1234.6-1244.9 on Friday, allowing the more prominent demand at 1250.1-1265.0 to remain intact for now. In the event that the bulls manage to remain afloat here, there is very little that we see stopping price action from rallying back up to retest daily resistance coming in at 1301.5.
H4 view: Thanks to a lower than expected US jobs report on Friday, we saw the yellow metal whipsaw through the broken Quasimodo line at 1257.4, touch gloves with a supply at 1268.1-1265.0 and then aggressively push down to demand chalked up at 1234.6-1241.3 (located within the extremes of the daily demand discussed above at 1234.6-1244.9).
Direction for the week: This all depends on how the daily buyers handle themselves around the above said daily demands. Supposing that they’re able to hold ground and push higher, weekly action may be forced back up to retest the recently broken .
Direction for today: Direction today looks rather limited since there’s little space for price to move. As far as we see things, buying, when we have not only the aforementioned H4 broken Quasimodo line in view, but also two H4 supplies at 1268.1-1265.0/ 1277.1-1272.4, is just asking for some drawdown! In regard to selling, yes, there’s a little room for price to retest the top edge of H4 demand at 1234.6-1241.3 from current prices, but selling here knowing that you’re shorting into daily demand, even though the weekly candles look set to extend lower, is not something we would feel comfortable participating in.
Our suggestions: ‘Sometimes the best position is no position’. This is so very true, and we believe this to be case with gold right now. That is, at least until the daily candles give some indication into which way they may break.