Commodities

Technical Analysis – Gold consolidates above 1,900, eyeing peaks again

Posted on August 24, 2020 at 10:08 am GMT

Anthony Charalambous, XM Investment Research Desk

Gold is edging sideways above the 1,900 handle, possibly forming a triangle pattern with the price targeting the upper bound of the triangle around 1,970. The bullish simple moving averages (SMAs) are maintaining a broader positive tone, while the short-term oscillators are helping keep the positive outlook alive.

The MACD is holding in the positive region although below its red signal line, while the RSI floats above the 50 threshold, looking to improve. Furthermore, the negative momentum in the stochastic oscillator appears to be waning, as the now rising %K line bounced just above the 20 mark. Noteworthy is the RSI, which has held above 50 since the sell-off from the all-time high.

To the upside, if the price manages to drive above the previous candles high, pushing off the Ichimoku lines at 1,940, initial tough resistance may occur at the upper boundary of the possible triangle around 1,970. Breaking above this would confirm the bullish structure possibly past the 2,000 round number, accelerating the price towards the 2,016 peak from August 18. Sustained gains may return the focus to the all-time high of 2,074.89 and the 2,113 level, that being the 261.8% Fibonacci extension of the 1,704 – 1,451 down leg.

If sellers take the reins steering under the Ichimoku lines, immediate tough support may develop from the 1,940 to 1,912 region, where the lower frontier of the triangle also is located. Should these key defences fail, the price may sink towards the 1,863 trough, where the 50-day SMA currently resides. Breaching this crucial trough could strengthen negative tendencies, meeting the 1,845 barrier and the 1,818 – 1,828 limiting section, ahead of the 100-day SMA at the trough of 1,789.

Concluding, the short-to-medium-term timeframe is strongly bullish above 1,863 and 1,789. Nevertheless, initial breaks of the confines of the triangle may dictate the next direction.

gold

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