Commodities

Technical Analysis – Gold range bound; foundation floor under pressure

Posted on November 23, 2020 at 9:49 am GMT

Anthony Charalambous, XM Investment Research Desk

Gold recently has been tiptoeing around the base of a more than two-month sideways market, after plunging below the Ichimoku cloud and the 50- and 100-day simple moving averages (SMAs). The slipping 50-day SMA and the unclear bearing of the horizontal Ichimoku lines, are promoting consolidation in the yellow metal.

The short-term oscillators reflect conflicting signals in directional momentum. The MACD, in the negative region, is holding below its red trigger line, while the stochastic %K line is pushing over its %D barrier, promoting strength in the commodity. The RSI maintains a hovering tone slightly underneath the 50 threshold. Nonetheless, the upward sloping 100- and 200-day SMAs are endorsing positive sentiment.

To the downside, strong support may commence from the foundation of the range between 1,848 and 1,860. Should this critical base fail to defend the positive structure, the price may dip towards the 1,828 and 1,818 borders, from September 2011 and July 8 respectively. Deteriorating further, the commodities’ descent may then be challenged by the 200-day SMA at 1,796 and the 1,789 trough beneath.

Pushing above the red Tenkan-sen line could see the price encountering initial resistance from the 50-day SMA – currently at the 1,899 high – until the 100-day SMA, merged with the cloud’s lower surface and the blue Kijun-sen line at 1,910. Overcoming these obstacles, the upper band of the cloud around 1,932 could impede the pair from reaching the resistance section of 1,960-1,974. Stepping over this heavy boundary, the ascent may shoot for the 1,992 high and the 2,000 psychological handle, before it makes efforts to surpass the 2,016 peak from August 18.

Concluding, gold remains restrained between 1,848 and 1,974. The short-term picture could shift should the price break below or above these limits.

gold

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