Commodities

Technical Analysis – Gold holds near return line of downward sloping channel; posted 6-month low

Posted on July 2, 2018 at 8:49 am GMT

Melina Deltas, XM Investment Research Desk

Gold started an aggressive bearish roller coaster over the previous three weeks, creating a fresh six-month low of 1245.84 last Thursday. The price is developing near the aforementioned low and the short-term technical indicators are pointing to more weakness in the market.

Looking at the at the 4-hour chart, gold prices are looking capped by the 20 and 40-simple moving averages (SMAs) which are negatively aligned after a bearish crossover that took place on June 15. The Relative Strength Index (RSI) is heading lower towards the threshold of 30, while the stochastic oscillator is moving lower.

Should prices continue the bearish movement, immediate support could come at the 50.0% Fibonacci retracement level of 1243.8 of the upleg from 1122 to 1366, which stands near the return line of the descending channel. A drop below this area would take the yellow metal to the 1236 support, taken from the low on December 2017.

To the downside, there is resistance just below the 1261, where the 40-SMAs stands at 1258.8, while above that, the next major resistance to watch is the 1272.5, which coincides with the 38.2% Fibonacci level.

Overall, the yellow metal has been developing within a downward sloping channel since April 11, indicating that the price remains in bearish mode in the long term.

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.