Commodities

Technical Analysis – Gold consolidates below multi-year top

Posted on April 29, 2020 at 6:38 am GMT

Anthony Charalambous, XM Investment Research Desk

Gold’s recent footing on the 100-period simple moving average (SMA) has kept the precious metal above the Ichimoku cloud and has returned it slightly above the 50-period SMA. Yet, the commodity’s two-week sideways move endures, unable to break out of the 1,739 and 1,660 boundaries. Further displaying the creeping horizontal mode are the unclear signals from the Ichimoku lines in the 4-hour chart.

Looking to the short-term oscillators, they too paint a picture of evaporated directional momentum. The MACD is standing weakened below its red trigger line and just under the zero mark, while the RSI, pointing upwards, holds at its neutral threshold. Moreover, an easing 50-period SMA turning mostly flat, is putting doubt for now, in the bigger positive stance.

If buying interest picks up, initial tough resistance could come from the 1,739 boundary, which has recently managed to keep the ascent at bay. Above this border, the nearby more than seven-year top of 1,746.95 could then prevent a rally primarily encountering the 1,754 high from November of 2012 ahead of the 1,775 resistance of October 2012. Sustained gains may then push towards the barriers around the 1,800 handle.

Alternatively, if sellers manage to steer below the 50-period SMA at 1,705 and the Ichimoku cloud beneath, first to test the drop is the 1,691 low coupled with the upward sloping 100-period SMA. A step lower could meet the 23.6% Fibo at 1,678, prior to challenging the lower boundary of 1,660. Diving past this important low, the 1,643 key trough and the nearby 38.2% Fibo of 1,636 may draw traders’ attention.

Overall, the yellow metal appears to be framed between the 1,739 and 1,660 levels in the very-short-term timeframe.

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.