ICmarkets
Short

Gold: Technical outlook and review...

FX:XAUUSD   Gold/U.S. Dollar
162 0 3
Weekly gain/loss: + $23.8
Weekly closing price: 1297.5
Weekly opening price: 1297.5

Weekly view: The gold             market enjoyed another successful rally north last week, gaining close to $24 in value! In consequence, the yellow metal spiked above a weekly supply zone drawn from 1307.4-1280.0 and has begun to reverse tracks. This area has been visited twice already and each time responded with relatively aggressive selling.

Daily view: From this angle, however, the metal is seen trading from daily demand coming in at 1288.5-1272.9. Assuming that this area holds up against the current weekly supply, we see very little fresh supply to the left of current price until the market reaches 1333             .4 – a daily Quasimodo resistance which sits just above a weekly Quasimodo resistance at 1331.0 (the next upside target beyond the current daily supply).

H4 view: Despite an earnest attempt from the buyers on Friday, price is, thanks to aggressive selling seen this morning, now trading back at H4 demand at 1282.1-1278.5. Provided that the buyers hold ground here, there’s upside potential seen to at least H4 resistance drawn from 1303.1, followed closely by H4 resistance at 1315.4 on this timeframe.

Technically, this market is a bit of a tricky beast to trade today. On the one hand there is potential for a sell-off from the weekly supply base at 1307.4-1280.0, and on the other hand, both H4 and daily buyers are trading from demand (see above).

Our suggestions: Ultimately our team ALWAYS tries to trade in their own best interests. And by doing so we usually avoid setups that are positioned nearby higher timeframe areas unless the lower timeframe price action is extremely convincing! Therefore, the best, and in our opinion, most logical route to take today would be to wait and see if price closes below the current H4 demand area. This, at least in our opinion, would indicate weakness within the current daily demand and strength from the current weekly supply, and to top it off, open up the path south down to H4 demand at 1264.4-1266.5 (sits just above daily support at 1262.2 – the next downside target beyond the current daily demand).

To trade this setup, nevertheless, we’d need to see two things happen. Firstly, a retest to the underside of the broken H4 demand would need to be seen, and secondly a lower timeframe sell signal following the retest (see the top of this report for entry techniques). Now, of course, how one enters here depends totally on the individual trader as some are aggressive and could simply short the breakout below the H4 demand, and others, like us, are conservative who needs a little more confirmation to be confident in risking risk capital.

Levels to watch/live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: Watch for price to consume 1282.1-1278.5 and look to trade any retest seen thereafter (lower timeframe confirmation required).
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