Commodities

Technical Analysis – Gold clashes with hardened upside boundary

Posted on December 28, 2020 at 9:12 am GMT

Anthony Charalambous, XM Investment Research Desk

Gold is in the process of confronting a fortified resistance zone from 1,896-1,907. This reinforced region comprises of highs, the 100-day simple moving average (SMA), the Ichimoku cloud and the overlapping descending trend line pulled from the all-time high. The horizontal blue Kijun-sen line and the mild downward slopes of the 50- and 100-day SMAs are promoting a more neutral-to-bearish picture.

However, the bullish tone in the rising red Tenkan-sen line and the hiking 200-day SMA, as well as the pickup in positive momentum in the short-term oscillators, are all suggesting the price may examine this tough upside obstruction. The MACD is creeping higher above its red signal line and the zero threshold, while the RSI is ascending in bullish territory. Furthermore, the stochastic %K’s positive overlap of the %D line promotes further advances in the price.

In the event buying interest intensifies, instant severe constrictions may stem from this resistance band of 1,896-1,907. Nonetheless, if buyers manage to overcome and penetrate above the falling diagonal line, the price may catapult towards the 1,960-1,974 limiting area, containing multiple peaks. Surpassing this too, the commodity may then challenge the 1,992 high from September 1.

Otherwise, restraining advances, sellers may find initial support commencing at the 50-day SMA at 1,867 and the red Tenkan-sen line beneath at 1,865. From here, the neighbouring support section from 1,856 until 1,845 may attempt to dismiss further losses towards the blue Kijun-sen line at 1,835. Still, should the price sink deeper, it may then target the nearby 200-day SMA at 1,825 and the adjacent 1,819 trough underneath.

Summarizing, gold appears to be edging slightly sideways in the short-term picture. Yet, the recent appreciation from 1,764 remains safeguarded by the 200-day SMA and the 1,845-1,856 buffer zone. However, a break above 1,907 may boost optimism in the commodity.

gold

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