ICmarkets

Interesting P.A on the yellow metal...

FX:XAUUSD   Gold/U.S. Dollar
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Although last week’s trading saw the yellow metal lose close to $10 in value at the close 1065.9, price continues to find supportive bids around demand at 1026.5-1054.8 (merges with the lower limit of a long-term wedge pattern from the low 1180.1). Assuming that the buyers remain defensive here, the next upside target in the firing range can be seen at 1098.6-1121.7 – a weekly swap (supply) zone.

As we scroll down to the daily picture, we can see that volatility picked up going into Thursday’s trade. Gold             sold off from swap resistance at 1071.2 down to just above a swap support at 1046.3, which just as quickly whipsawed back up to 1071.2 by the week’s end. We believe that if a daily close above this level is seen this week, then this would set the stage for a rally higher up to at least swap resistance coming in at 1084.5, and even possibly up to the swap supply at 1098.6-1108.6 (coincides with the weekly swap zone at 1098.6-1121.7).

Stepping down one more level to the H4 shows us that following a rebound from the 1049.9 region late on Thursday, Gold             aggressively extended higher going into the American session on Friday, reaching highs of 1071.4 by the day’s end. This recent movement has opened up what looks to be a nice-looking sell opportunity this week.

Check out the H4 supply area fixed between 1078.2-1072.8. Not only does this area merge with a H4 trendline taken from the high 1088             .7 and the widely-respected 61.8% Fibonacci number at 1072.8, it’s also trading just above the daily swap (resistance) level at 1071.2. The only drawback we see to a short here is obviously the fact that weekly buyers are currently defending demand at 1026.5-1054.8, and the fact that there is a H4 Quasimodo resistance level at 1078.9 lurking just above our chosen H4 supply (fakeout possible). All this means, at least for us anyway, is we will not be placing any pending orders here, and will only trade if lower timeframe confirmation is seen.

In the event that this does not come to fruition, and Gold             drops from current prices, all eyes will then be on the double bottom support at 1049.9 for possible longs. This barrier boasts confluence from a daily swap (support) level at 1046.3 and also from weekly demand just mentioned above.

Levels to watch/ live orders:

• Buys: 1049.9 Tentative – confirmation required (Stop loss: dependent on where one confirms this level).
• Sells: 1078.2-1072.8 Tentative – confirmation required (Stop loss: dependent on where one confirms this area).


Great update. Thanks
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