Commodities

Technical Analysis – Gold fades below capping MAs; sideways tone remains

Posted on October 29, 2020 at 3:58 pm GMT

Anthony Charalambous, XM Investment Research Desk

Gold was recently redirected downwards by its congested simple moving averages (SMAs), neutralising the gradual one-month incline from 1,848. The fairly sideways demeanour of the SMAs over the last month, endorses the commodity’s neutral tone between the boundaries of 1,845 and 1,933.

The short-term oscillators convey opposing signals in directional momentum. The MACD is declining below its red trigger line in the negative region, while the downward sloping RSI is flirting with the 30 mark. The stochastic oscillator maintains a positive charge but is reflecting signs of waning in its positive bearing.

To the downside, initial constraints may arise from the 1,860 low. Slipping further, the commodity may encounter reinforced support from the 1,845 to 1,848 foundation of the range. Should negative tendencies triumph past this key section, the price may dive towards the 1,825 level, that being the 61.8% Fibonacci retracement of the up leg from 1,670 to 2,074. Sinking past this too may stretch the decline towards the 1,815 barrier.

Otherwise, if buying interest picks up, immediate resistance may commence from the 50.0% Fibo of 1,873 ahead of the 1,885 nearby high. A step above may then face the zone of troughs from 1,889 to 1,898. Conquering these, the climb may then be challenged by the 100- and 200-period SMAs at 1,903 and 1,906 respectively. Overcoming these significant borders may shoot the commodity towards the 38.2% Fibo of 1,920 and the resistance belt of 1,931 – 1,933. If further gains unfold, the peaks of 1,955 and 1,960 may draw traders’ attention.

In brief, despite recent fading, gold remains rather neutral, ranging between 1,845 and 1,933. A break either above or below these frontiers may set the next direction.

gold

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