Commodities

Technical Analysis – Gold remains optimistic despite receding to Ichimoku cloud

Posted on February 3, 2020 at 9:19 am GMT

Anthony Charalambous, XM Investment Research Desk

Gold’s recent withdrawal from 1,594 is tackling the uptrend line, drawn from 20 December 2019, and the 1,575 level – near the Ichimoku cloud – which is the 23.6% Fibonacci retracement of the up leg from 1,458.42 to 1,611.28. Moreover, the flattening of the Ichimoku lines reflects a pause in the market.

Although positive momentum has weakened, the improving picture looks to be intact, something also aided by the upward sloping simple moving averages (SMAs). The MACD is in the positive zone and barely above its red trigger line while the falling RSI is just above its neutral mark.

To the downside, sellers may immediately confront robust support arising from the vicinity of the uptrend line, the 23.6% Fibo of 1,575 and the Ichimoku cloud joined by the 50-period SMA at 1,572. Conquering this area, the 1,563 low coupled with the 100-period SMA could halt further declines towards the 38.2% Fibo of 1,553 and nearby swing low of 1,546. Clearing this, the 200-period SMA at 1,537 and 50.0% Fibo at 1,535 may move into the spotlight.

If buyers retake control and swing the yellow metal back up, the recent 1,594 high could apply the initial pressure. Surpassing this, the price may rally towards the almost seven-year peak of 1,611.28 before testing the 1,620-high back from 26 February 2013. If buying interest continues, the 1,629 level, which is the 123.6% Fibonacci extension of the down leg from 1,611.28 to 1,535, may draw focus.

Overall, the very short-term timeframe continues to appear bullish above the Ichimoku cloud and the 1,563 level, while a close below the 1,535 trough could only shift the near-term outlook to bearish.

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.