ICmarkets
Short

Interesting action being seen on gold at the moment...

FX:XAUUSD   Gold / U.S. Dollar
374 1 7
Weekly gain/loss: + $28.5
Weekly closing price: 1304.2

Weekly view: From the weekly viewpoint, we can see that bullion pressed higher into the resistance area coming in at 1307.4-1280.0 last week. This move marks the third consecutive weekly gain for this market since bottoming out at lows of 1241.2. A decisive close above the current barrier could bring about a rally up to the Quasimodo resistance drawn in at 1361.7.

Daily view: While the bears appear on the back foot on the weekly chart, daily bullish momentum looks to be diminishing since connecting with the resistance area coming in at 1305             .3-1322.8. The next target to have an eye on beyond this area falls in at a supply area drawn from 1343             .5-1336.0, while a downside move could see the yellow metal revisit demand at 1234.6-1244.9.

H4 view: Friday’s US job’s report saw the metal aggressively strike lows of 1295.2, before changing gear and heading north to highs of 1307.0. Overall, the impact was minimal though given resistance at 1306.1 held firm (bolstered by a 61.8% Fib resistance at 1304.5 ).

Direction for the week: According to higher-timeframe structure (see above), there’s a good chance the gold             market may reverse this week. Although we believe this to be valid from a technical standpoint, one has to keep the fundamentals in mind this week, specifically Tuesday’s US elections which could place technicals on the bench during this time!

Direction for today: We really like the H4 supply seen above the current H4 resistance at 1313             .2-1309.2. The zone demonstrates strong downside momentum (always a good sign), sits just above the aforementioned weekly resistance area , and is lodged within the current daily resistance area as well as fusing nicely with September’s quarterly open at 1309.8.

Our suggestions: Though the above said H4 supply is attractive, we still advise caution here. Not because of the technicals mind you, more to do with the fundamentals this week. Should the zone see some action today, we would, if the H4 chalks up a lower timeframe sell signal (M15/H1), look to short from here, and attempt to protect our position prior to Election Day. As far as lower timeframe confirmation goes, we would like to see either an engulf of a demand followed up by a retest, a trendline break/retest or simply a collection of well-defined selling wicks seen within or around the H4 supply.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1313             .2-1309.2 (lower timeframe confirmation required prior to entry, stop loss: dependent on where one confirms this area).
Can we forecast that 1306-5 resistance will be support this week.
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