Commodities

Technical Analysis – Gold creates bullish correction after hitting 1,160 in near term

Posted on August 20, 2018 at 9:01 am GMT

Melina Deltas, XM Investment Research Desk

Gold prices edge higher today and are set to post the second bullish day in a row. In the previous week, the precious metal hit a fresh 19-month low of 1,160 before heading higher. Also, the price advanced above the 20-simple moving average (SMA) in the 4-hour chart and is currently approaching the 40-SMA, with the technical indicators showing some improvement as well; the Relative Strength Index (RSI) climbed into positive territory, above the 50 level but not much, and the MACD oscillator continues the upward rally above its red-trigger line, indicating that positive momentum could hold in the short-term.

If prices continue to head higher, resistance could come from the 23.6% Fibonacci retracement level of the downleg from 1,309 to 1,160, around 1,195. A jump above this region, would reinforce the short-term bullish view and open the way towards the 1,200 psychological level.

However, should a downside movement take form again, immediate support will likely come from the 20-SMA near 1,179. Further losses could drive gold until the 1,172 before being able to challenge the 19-month low of 1,160.

Overall, the outlook remains negative since prices hold below all the moving average lines and the bearish cross between the 50- and the 200-day SMA stays in place.

commodities gold

Legal disclaimer: The material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instruments. XM accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. The research and analysis does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it.

It has not been prepared in accordance with legal requirements designed to promote the independence of research, and as such it is considered to be marketing communication. Although we are not specifically constrained from dealing ahead of the publication of our research, we do not seek to take advantage of it before we provide it to our clients. We aim to establish, maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. We operate a policy of independence, which requires our employees to act in our clients’ best interests and to disregard any conflicts of interest in providing our services.

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losing all of your invested capital, so please make sure that you fully understand the risks involved.