With this in mind, we can see that over the course of this week, the yellow metal printed two daily formations as price drove lower into a daily demand area seen at 1305.3-1322.8 (see blue arrows). Therefore, although the weekly chart is sending a clear warning to be wary of shorts, daily candle action is, despite also occupying a daily demand area, suggesting that the bulls may be weak.
Moving over to the H4 chart, thanks to yesterday’s selloff a 1:1 measured move (see black arrows) was seen from a high of 1331.8 down to lows of 1309.2. Although bullion whipsawed through the current H4 at 1312.0-1316.0 (merges with a H4 78.6% Fib support at 1313.1), it remains on solid footing for the time being.
Our suggestions: In spite of the daily candles, we feel that a buy from the current H4 is worthy of consideration today. However, given the aggressive push through the zone yesterday, this could have potentially weakened it. Therefore, we would strongly encourage traders not to simply punch the buy button here and hope for the best. Be patient and wait for lower timeframe confirming price action (preferably on the M15 up) before placing your order. This could be either an engulf of supply followed by a retest as demand, a break/retest or simply a collection well-defined buying tails planted within the H4 buy zone.
Assuming one manages to lock down a position from here, we’d look to target yesterday’s high 1328.1, followed closely by the H4 supply area seen at 1331.8-1329.6.