Commodities

Technical Analysis – Gold retraces to 23.6% Fibonacci; bounces off uptrend line

Posted on September 16, 2019 at 9:47 am GMT

Anthony Charalambous, XM Investment Research Desk

Gold bounced off the uptrend line drawn from May 30, gapping above the 21-period simple moving average (SMA) and then was halted by the 50-period SMA. The metal had consolidated around the 1488 level, which is the 23.6% Fibonacci retracement of the up leg from 1266.20 to 1556.92, after dropping from a recent seventy-seven-month high of 1556.92 on September 4.

The 100-period SMA has flattened suggesting the sideways move may extend. While also neutral, the MACD, just below the zero line is above its trigger, while the RSI is in bullish territory, flat at the 50-level. The uptrend line and the up-turn in the 21-period SMA, support the bigger positive picture, while the 50-period SMA itself, warns of a re-test of the uptrend line – filling the gap.

If the bulls pick up and manage to push above the 50- and 100-period SMAs, around 1510 and 1519 respectively, the metal could propel to test the 1535 resistance. Moving higher, the recent high of 1556.92 could play out and if the bulls dominate, new buying orders could rally the price to the swing high of 1590.16, from back in April of 2013.

If the 50-period SMA holds and the sellers drive the price down past the 21-period SMA, the durable support of 1488, which is the 23.6% Fibo and the uptrend line, could apply pressure. Surpassing the 1488, sellers could steer the fall to the 38.2% Fibo of 1446 ahead of the August 2013 high of 1434.

Overall, if the uptrend line holds, the short-term neutral-to-bullish picture could be confirmed by a move above 1535. On the other hand, only a move below 1400 could switch the bias to bearish.

commodities gold

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