Commodities

Technical Analysis – Gold sustains bullish tone despite crawling sideways

Posted on September 7, 2020 at 8:15 am GMT

Anthony Charalambous, XM Investment Research Desk

Gold is currently extending a sideways pattern above the simple moving averages (SMAs) and the 1,900 psychological number. Directional momentum has dried up as displayed by the steadied Ichimoku lines. Nonetheless, the rising SMAs continue to dictate a predominant bullish bias.

The short-term oscillators reflect a relatively paused picture under a restrictive diagonal line drawn from the all-time high. The MACD has remained somewhat in the positive region but beneath its red signal line, while the RSI hovers marginally underneath its neutral threshold. That said, the stochastic oscillator is bearish and the %K line has slipped below 20, promoting weakness in the commodity.

If buying interest picks up, early congested resistance may arise from the flattened Ichimoku lines, currently at 1,947 and 1,969, and the descending line. Conquering these obstacles, the nearby barriers of 1,992 and 2,016 may prevent the price from stretching to revisit the all-time high of 2,074. In the event the bulls persevere and drive the commodity into unmapped territory, they may target the 2,113 level, that being the 261.8% Fibonacci extension of the down leg from 1,704 to 1,451.

Otherwise, if sellers resurface, immediate hardened support may develop from the 1,903 to 1,916 section, which also encompasses the 50-day SMA and the cloud’s upper band. Plunging below this, the critical 1,863 trough may come into focus. Should this barricade fail to halt the decline, the price may challenge the 1,818 – 1,828 region with the adjacent 100-day SMA, before the 1,789 trough draws traders’ attention.

Summarizing, gold sustains a short-term neutral-to-bullish bias above 1,900. It seems that a sideways structure may nudge the price towards the cloud and restrictive line before a clear direction unfolds.

gold

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