Gold Is Moving North, Albeit Slowly

Gold has been developing within a horizontal range channel between 1308 and 1349 for eleven weeks.

I think it is far more likely for there to be a breakout to the upside and in this case we can expect a rally to 1390 – 1391, a level that Gold has last reached in March 2014.

In my opinion, after reaching that resistance level Gold will fall back to test the breakout level. Depending on the way it develops there it will become clear whether we can expect a rally toward the resistance zone of the diagonal channel in blue.

Although the Gold trade has been rather slow during the past few months I think that it will reach and test that resistance zone in the long term.

To the downside the support is in the zone around 1310 – 1302 but I think there is less of a possibility for a test of that zone.

USD Is Losing Strength

During the past week the US dollar lost its strength against all main currencies.

During the past seven days alone EUR/USD rallied with a little over 300 pips, from 1.19154 to 1.22179.

USD/JPY fell from от 113.386 to 110.911.

GBP/USD ralllied from 1.34576 to 1.37441.

I think USD/CHF will probably continue depreciating, unless yet another interference by the Swiss Bank prevents that.

The weakening of the US dollar made investors look for a refuge in Gold and it rallied from 1308.10 to 1339.31.

The USD also continued depreciating compared to the RUB.

I think this depreciation across the various USD currency pairs will continue next week as that is the perspective of the technical picture drawn by the charts.



 

Gold May Rally To 1340 – 1345

Gold has been developing within a consolidation and a trend channel that is about 150 – 160 pips wide since 3rd January and it seems that it has headed for the resistance which is around 1326 – 1328. The channel is particularly obvious on the H4 time frame (in red).

At the same time it should be noted that RSI has formed a divergence (in blue) and that the indicator has broken out above the divergence line.

These are two significant signals that there may be a breakout above the channel and a rally to 1340 – 1345.

An alternate scenario to the downside is possible, I think, only if Gold breaks out below the trend channel (in red) and remains below it.

Gold Renewed Its Rally And It May Continue Moving North

The trend lines on the chart are old, I have kept them so I can follow how the price of the metal is developing and now it is obvious that is has reached a trend line which could be a resistance. It is possible that at his level (1306) the metal could stall and then form a correction to the downside, testing the resistance at 1290 that it broke out above.

Despite that I think we can expect that the next target for Gold will be around 1330 - 1333. If Gold breaks out above that resistance the next target of the rally could be 1375-1380.

In case there is a drop Gold could test 1170 – 1130 but for now that doesn’t seem very probable.

Gold Is Heading For A Test Of Historic Support Zone

The expectations that Gold would rally did not come true, on the contrary, it broke out below the support trend line of the channel after it formed a gap at the end of last week that it did not recover and it continued depreciating.

The metal has not overcome the zone around 1260 – 1265 (marked in blue) which has been a key support zone in the past few weeks as it can be observed on the W1 time frame.

In case Gold breaks out below that zone (and the chart hints there will be a breakout) we could expect that it will continue falling to test the next strong support around 1190-1180 (marked by a red line). This has been a key historical support for the precious metal as it can be seen on the monthly time frame and if the depreciation continues I think we will see a new test of that level.

Gold Continues Developing Within The Trend Channel

Gold continues developing within the trend channel, but after it broke out below 1277 – 1275 it looks like it will head for the next support trend line (in blue) around 1260-1250.

I think that in case the precious metal does break out below that support too we could expect it to continue depreciating to 1172 or even lower – to 1113.

However, in my opinion, Gold is more bullish than bearish and the market aims for a rally, so I think that after the test of the support trend line Gold will resume its move to the upside and the targets in the medium term are the resistance trend line (in red) around 1360 – 1365 and the one at 1400 (in blue).

Gold Rallied In A Perfectly Formed Channel

Gold reached the diagonal support at 1260.50 (in brown) for a second time and renewed its rally. At the same time it became possible to draw another diagonal trend line alongside the trend channel in which Gold has developed since 15th December 2016 (in red) and which essentially widened the trend channel.

I have marked the movements of the precious metal in the trend channel in blue. Logically speaking, I think that there will be a rally to the resistance trend line (in red), which will finish the cycle of three threes of waves within the channel. My main expectation is a rally to 1420.

In the alternate scenario it will reach the trend line marked by a red dotted line and ten fall to the brown trend line.

Of course, these are just the two main scenarios. There are other possibilities depending on the direction the market will pick.

Gold Is Approaching A Support Zone

During the last three weeks Gold formed a significant pullback from the local high at 1357.45, which it had reached for the last year and one could almost believe it would reach 1375.11 which is the high from July 2016. The precious metal, however, failed to break out above the resistance at 1357.50 and literally dropped with 870 pts.

There is a chance for Gold to meet a strong support in the zone around 1270 – 1265 and to rebound from it, renewing  the upward trend.

In the alternate scenario it would break out below the above-mentioned support zone and I think that if that happens we could expect a drop almost to 1102.

I, personally, am more inclined to expect a renewal of the move north but let’s see what scenario the market will pick.

Is This A Corrective Drop Before Gold Rallies Again?

Gold rallied to $1357.45, which is the highest local high the metal has reached for the past year, and then began to retrace – for the past two weeks it has dropped with almost $30, at the moment being at $1324 – $1325.

That pullback is normal, considering the fact that it reached the strong resistance visible on the monthly time frame at $1360, which stopped its rally.

On the W1 time frame, however, Gold returned in the upward trend channel and continued developing within it, which is why I view this drop as corrective. It is possible Gold will reach the support trend line, after which it will start climbing again to the resistance trend line at $1390 – $1400.

Gold Keeps Moving North

Investors turning to trading Gold when there is tension in world politics is an old rule. Considering the North Korean nuclear tests, which have caused so much tension on the world politics stage, it is completely reasonable that in the past few months Gold has been moving exclusively to the upside.

Gold did not even recover the gap that formed when the market opened after the latest North Korean nuclear test and I do not think the precious metal will recover it soon.

For the moment Gold is range-bound around $1330 – $1340 and it appears that it is forming a flag. So far there is not confirmation for that and for there to be one Gold needs to reach a trend line for the fourth time.

Despite that, in my opinion, the closest target for the moment is the resistance around $1375 which is the last high formed in July 2017.

Gold Has Formed Contradicting Signals On Different Time Frames

Gold continues slowly depreciating and on the monthly time frame it is still gravitating toward the zone around the middle line of the Bollinger Bands indicator, which typically draws the price close to it and serves as a very strong support and resistance zone.

On the W1 time frame we can see a breakout of the trend channel, although the price has reached its trend lines on three times, so I would not characterize it as a flag which is a signal for continuation of the bearish move.

On the D1 time frame there is an inverted bullish hammer bar which is a possible signal for a rally.
On the H1 and M30 there is a flag, the height of which is 60 pips at its base and could lead the pair with 60 pips to the downside toward 1219.

As we can see, the signals on the different time frames are rather contradictory, which means that Gold will find support in this zone at least for now and it is possible for the consolidation to continue.

The Medium Term Gold Tendency Is Bearish

That tendency is particularly noticeable if you examine the largest, monthly time frame.

Gold has been moving within a wide consolidation for the past few months, and during the past five months it has been developing the barbed wire candlestick formation a little above the middle line of the Bollinger Bands indicator, which is essentially a MA20 indicator and often work as a magnet, drawing the price as either a strong resistance or a strong support level.

After the barbed wire has finished forming there is usually a sharp movement in either direction.

If we look at the smaller, weekly time frame, we will notice that Gold is trading within a trend channel which so far is developing as a flag, but the price has reached its trend lines only three times. We can conclude that the flag isn’t fully developed and there will be a possible movement to the resistance trend line.

More important, however, is in which direction there will be a breakout. In case it is to the downside, we can expect a drop to the historical low from 1^st December 2015 at $1046.14.

In the alternate scenario there will be a breakout to the upside and a new rally, but that scenario is less probable for the moment.

Gold Is Moving Within A Trend Channel

For the past twelve hours Gold has been moving to the upside in a trend channel with a height of 53 pips at its base and it has formed four points of contact so far. That gives us the opportunity to trade the breakout of that channel, regardless of its direction.

At a first glance this channel looks like a trend-continuation flag pattern and that would be confirmed if the breakout is to the upside. Should that happen we could expect a move to the upside towards 1180.

If Gold breaks out to the downside I think the closest target will be at 1150, and a more long-term target will be at 1110.

If we judge by the bars that are forming above the support at 1155 we could conclude that Gold will move to the resistance trendline again. Still, while Gold is moving within the channel it should be traded with caution.