Gold’s continued weakness and an expected turnaround from the lows captured the weekly price action. Gold slid to its lowest point of 2018 but recovered sharply from the lows gaining over $20 before settling for gains of just under $20 mark for the week. This price movement created a double bottom and also respected the weekly trendline support which is a bullish sign and thus a reversal in the trend. Fundamentals were and are as it is but technically the situation has changed in favor of the bulls.
On the chart –
Gold’s reversal from lows speaks for itself about the change in the trend. Technically, now the upmove is supported by patterns which were absent from past few weeks. Gold should also take ques from a falling dollar which may help the price move upward faster than expected. Fundamentally, events are lined up to support higher prices and with a confirmation from technical side journey back towards the breakdown point at $1295 starts which if successfully crossed can lead the metal higher to its 52 week highs. We have 2 scenarios –
1. Gold’s respecting of the weekly trendline support suggests the downside is over for sometime if not fully. With this price action gold can move towards $1260. If this is crossed it can rally till $1276. And if this is conquered it can test the crucial point at $1295.
2. There are no short trades as the support was respected.
Bullish view – After 3 weeks of pain, the situation has turned in favor of the bulls who seem to be in a firm control over the scene after having plenty of action-less days. Finally it was a bullish week, and bulls can continue this momentum in the coming days/weeks as price action suggests a reversal in the trend. Alternatively, this bullishness may be short-lived if the breakdown point is not crossed and the price reverses back from there but that’s a slightly longer story as immediate trend is sounding very bullish.
There are no bearish views as gold took support of the trendline.
On larger terms, Gold has turned bullish with the prices expected to head higher.
Possible trades are on both sides, gold can be bought above $1260 for the targets of $1276 and $1295 with a stop loss placed below $1243.
There are no immediate short trades as $1243 was respected. Trades come alive if this support breaks or if gold fails to go higher above breakdown point.