Commodities

Technical Analysis – Gold resumes ascent, steering above the Ichimoku cloud

Posted on August 19, 2020 at 12:35 pm GMT

Anthony Charalambous, XM Investment Research Desk

Gold has nudged back above the Ichimoku cloud and over the simple moving averages (SMAs) after a bounce off the 200-period SMA, around 1,863, resetting the upward action. The precious metal has recouped a decent amount of the losses from the all-time high of 2,074.89 to 1,863 low, and continues to be aided by the now bullish Ichimoku lines.

The commodity’s positive sentiment appears restored above the cloud, despite the fresh bearish crossover of the 100-period SMA by the 50-period one, and the weakening in the short-term oscillators. The MACD, in the positive region, has eased towards its red trigger line, while the RSI is fading towards its 50 threshold. The stochastic oscillator maintains its negative bearing, promoting further deterioration in the price.

If buyers rise above the red Tenkan-sen line at 1,997, initial resistance may commence at the 2,016 fresh high. Overtaking this, the price may shoot up to challenge the 2,050 and 2,062 peaks, before revisiting the all-time top of 2,074.89. Thrusting into uncharted waters, the commodity could jump to meet the 2,100 handle ahead of the 2,125 mark, which is the 123.6% Fibonacci extension of the down leg 2,074.89 – 1,863.

To the downside, immediate hardened support may originate from the 1,980 – 1,969 key section, which encompasses the 50-period SMA at 1,976. The former level is the 100-period SMA, joined with the 23.6% Fibonacci retracement of the up leg from 1,670 to 2,074.89, while the latter refers to the ceiling of the cloud, coupled with the blue Kijun-sen line. Diving under the cloud, the 1,930 low and the 200-period SMA, just beneath the 1,907 barrier, may attempt to terminate the decline. Steeper drops may then test the 50.0% Fibo of 1,873 and the 1,863 nearby critical trough.

Summarizing, should the price remain above 1,969 in the very-short-term timeframe, this may secure confidence in the improving picture.

gold

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