Commodities

Technical Analysis – Gold trades in consolidation area in short-term; bearish mode in medium-term

Posted on July 30, 2018 at 9:58 am GMT

Melina Deltas, XM Investment Research Desk

Gold has been consolidating since July 19 and has been stuck below the 23.6% Fibonacci retracement level near 1235 of the downleg from 1309 to 1211.38. The price holds within the upper boundary of the 1235 resistance and the lower boundary of the 1218 support barrier, while it also stands below the 20- and 40-simple moving averages in the near-term.

Turning to the technical indicators, the MACD oscillator is falling below the zero and trigger lines strengthening its momentum. Additionally, the stochastic oscillator is heading lower towards the oversold zone, while the moving averages in the 4-hour chart are ready for a bearish crossover.

If price action remains slips lower, there is scope to challenge the 1218 support. A drop below this area would take the price closer to the one-year low (1211.38), endorsing the longer term bearish structure. Further losses would open the way towards the 1204 support level, taken from the low on July 2017.

However, if the market extends gains to the upside, the next level to have in mind is the 1235 resistance barrier, which stands near the 23.6% Fibonacci mark. A jump above this area could drive the price until the next immediate resistance of 1238, penetrating the descending trend line to the upside. Should price move higher, it would touch the 38.2% Fibonacci of 1248.67.

Overall, the precious metal has been holding within a significant downward movement since June 14, indicating that the price remains in a bearish mode in the medium term.

commodities gold

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