Commodities

Technical Analysis – Gold’s climb restricted by Bollinger band and 23.6% Fibonacci

Posted on February 10, 2020 at 9:42 am GMT

Anthony Charalambous, XM Investment Research Desk

Gold’s gradual incline – after reversing ahead of the 1,546 low – appears to have stalled between the 50-period simple moving average (SMA) and the upper-Bollinger band residing at the 23.6% Fibonacci retracement of the up move from 1,458.42 to 1,611.28.

The short-term oscillators reflect improving positive momentum. The MACD, above its red trigger line, has risen above the zero mark, while the RSI is increasing in the bullish territory. Moreover, all SMAs have kept their bullish picture intact.

A move back below the immediate 50- and 100-period SMAs around 1,568, could find initial friction at the mid-band coupled with the 1,563 support. Moving underneath this, a key support area from the 38.2% Fibo of 1,553 – where the uptrend line drawn from 13 December 2019 also lies – until the 1,546 swing low, which also encompasses the 200-period SMA joined with the lower-Bollinger band, could prevent further declines. Clearing this significant barrier, including the ascending trendline, the yellow metal could drop towards the 50.0% Fibo of 1,535, coinciding with the trough from January 14.

Otherwise, if buyers manage to climb above the capping upper-Bollinger band and the 23.6% Fibo of 1,575, the price may shoot towards the fresh peak of 1,594. Surpassing this resistance, the almost seven-year top of 1,611.28 could challenge the bulls ahead of the 1,620 high from 26 February 2013. Overhead, the 1,629 level may attract attention, which is the 123.6% Fibonacci extension of the down leg from 1,611.28 to 1,535.

Summarizing, the precious metal has preserved its short-term neutral-to-bullish bias and only a violation below the 1,535 low could put the positive picture at risk.

commodities gold

Legal disclaimer: The material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instruments. XM accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. The research and analysis does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it.

It has not been prepared in accordance with legal requirements designed to promote the independence of research, and as such it is considered to be marketing communication. Although we are not specifically constrained from dealing ahead of the publication of our research, we do not seek to take advantage of it before we provide it to our clients. We aim to establish, maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. We operate a policy of independence, which requires our employees to act in our clients’ best interests and to disregard any conflicts of interest in providing our services.

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losing all of your invested capital, so please make sure that you fully understand the risks involved.