Commodities

Technical Analysis – Gold bulls look exhausted near 2-week peak in very short-term

Posted on February 17, 2020 at 7:15 am GMT

Melina Deltas, XM Investment Research Desk

Gold stretched its upside rally to a two-week high of 1,584.90 on Friday before pulling slightly lower in a bullish sloping channel in the 4-hour chart.

Currently, in the near term, the price is losing some momentum confirmed by the technical indicators as the RSI is flattening near the 70 level, suggesting an overbought market. Also, the stochastic oscillator is turning lower as it posted a bearish crossover within its %K and %D lines above the 80 level, signaling a possible downside reversal as well. However, the market trend is holding far above its moving averages and the Ichimoku cloud.

Should the bears take control and the price extend lower, support to downside movements could be initially detected within the 1,578 – 1,576 area, which includes the 23.6% Fibonacci retracement level of the up leg from 1,547.33 to 1,584.90. Clearing that zone, the next stop could be around the 38.2% Fibo of 1,570, which overlaps with the upper surface of the Ichimoku cloud, but first it needs to slip below the 20-, 40-, and 100-period simple moving averages (SMAs). Below that, the 50.0% Fibo of 1,566 is coming into focus.

Alternatively, a jump above the two-week high of 1,584.90 could open the door for more gains towards the one-month high of 1,593.53, reached on February 3. Moreover, the almost seven-year high of 1,611 could serve as strong resistance too, continuing the long-term bullish tendency.

In the very short-term picture, the sentiment is neutral to bearish as the price is flattening below the two-week high. Despite the latest move, the price has been developing within an upward channel since February 5, adding optimism for a brighter outlook.

forex 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.