ICmarkets
Long

Technical outlook and review on gold...

FX:XAUUSD   Gold/U.S. Dollar
285 0 6
Weekly gain/loss: + $15.8
Weekly closing price: 1266.0

Weekly view: Following the rather aggressive break below the support area seen at 1307.4-1280.0 three weeks ago, the metal bottomed out around the 1241.2 neighborhood, and now looks to be on course to retest the underside of this recently broken zone as resistance. Should this come into view, there’s potential for another voracious leg down from here to a support area formed from 1205.6-1181.2 (fuses with two weekly trendline support ).

Daily view: Our read on the daily chart shows that demand at 1234.6-1244.9 is currently providing this market with support. In the event that bullion continues to be favored here, we may see price shake hands with resistance at 1301.5, seen located relatively deep within the above mentioned weekly resistance area . Given the strength shown so far from this daily demand zone , the yellow metal may be bid up to the aforementioned daily resistance level before we see the sellers make any noteworthy appearance.

H4 view: The current situation on the H4 chart is an interesting one. The unit closed the week in between a supply zone at 1268.1-1265.0 and a demand coming in at 1260.2-1263.8. Now, directly above this supply, there’s another supply planted at 1277.1-1272.4, which did a superb job in suppressing buying on Wednesday last week. Meanwhile, below the current demand, space to run down to a support level at 1249.7 is seen.

Direction for the week: Going by what we’ve noted on the higher-timeframe picture, the upside is more favorable this week, in our opinion, at least until the weekly resistance area at 1307.4-1280.0 is in view.

Direction for today: With a number of key Fed officials speaking today at 1pm and 6pm GMT             this may inject some volatility into this market today. However, in that Monday’s are usually slow; we do not think price will breach H4 demand at 1260.2-1263.8 or the H4 supply at 1277.1-1272.4.

Our suggestions: A break beyond the current H4 demand base could be considered a bearish cue to either sell the breakout, or conservatively wait for price to retest the underside of the demand as supply. However, we would not feel comfortable selling beyond here knowing where we are positioned in the bigger picture at the moment.

A break above the H4 supply at 1277.1-1272.4, nevertheless, is something our team is interested in seeing. The reason being is that beyond this barrier, the pathway north from here is clear up to the aforementioned daily resistance. As such, should price retest this boundary as demand (after a close higher) followed by a reasonably sized H4 bull candle, one could look to go long from here targeting the daily level. However, do remain aware that by entering long from here, even with the confirmation of a H4 bull candle, you’re effectively buying directly into a weekly resistance area .

Levels to watch/live orders:

• Buys: Watch for a close above the H4 supply at 1277.1-1272.4 and then look to trade any retest seen thereafter (H4 bullish close required prior to pulling the trigger).
• Sells: Flat (Stop loss: N/A).

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