Commodities

Technical Analysis – Gold stays within tentative descending channel

Posted on November 18, 2019 at 8:27 am GMT

Christina Parthenidou, XM Investment Research Desk

Gold recouped a small portion of its losses last week to close slightly positive after finding support at 1,445 and near the bottom of a tentative descending channel.

Despite the rebound, the price remained slightly below its 20- and 50-simple moving averages (SMAs) that maintain a bearish cross and under the Ichimoku cloud.

Meanwhile in momentum indicators, signals are also discouraging as the RSI was unable to return above its 50 neutral mark and the MACD held stable below its red signal line.

Therefore, the short-term bias is currently viewed as negative.

The 1,445 level, which coincides with the 38.2% Fibonacci of the upleg from 1,266 to 1,556 could provide some footing as it did last week if selling pressure increases. Beneath that barrier and the descending channel, the price could stabilize within the 1,411-1,380-region formed by the 50% and 61.8% Fibonacci retracement levels.

On the upside, the tentative down trendline drawn from the 1,556 peak could become valid if the market bounces on it for the third time. Before that however, the bulls should first overcome the 1,480 handle and the 23.6% Fibonacci. Above the trendline and the previous peak of 1,515 the focus will shift to the September 24 high of 1,535 and then up to the 6 ½-year high of 1,556.

In the three-month picture, the yellow metal is in a neutral mode within the 1,556 -1,445 boundaries and only a significant violation at these edges would determine the next direction in the market.

Summarizing, downside corrections seem more likely in the gold market in the short-term, where any decisive close below 1,445 would shift the neutral medium-term outlook to a negative one too.

commodities gold

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