Commodities

Technical Analysis – Gold revisits Ichimoku cloud; flattens after strong bullish action

Posted on March 30, 2020 at 6:30 am GMT

Melina Deltas, XM Investment Research Desk

Gold found a strong wall near the 1,644 resistance level as it created an aggressive bullish rally from the 1,454 support area.

The price successfully jumped above the 20- and 40-day simple moving averages (SMAs) turning the MACD oscillator higher near its zero line as well. However, the stochastics completed a bearish crossover within its %K and %D lines in the overbought area, while the RSI is flattening slightly above the 50 level. Both are suggesting weak upside movement in the short term.

The next target is the immediate support in the Ichimoku cloud, the 20- and 40-day SMAs currently at 1,595. At this stage the market would see a resumption of a downward move and put the lower surface of the Ichimoku cloud at 1,577 in place ahead of the 200-day SMA at 1,508. Even lower, the commodity may hit the 1,445 – 1,454 support area, taken from the lows on November 2019 and March 20.

Upside moves are likely to find resistance at 1,644. There is an important resistance level at the seven-year high of 1,703 before moving towards the 1,795 barrier, identified by the peak on October 2012. Rising above this zone would help shift the focus to the upside towards the 161.8% Fibonacci extension level of the down leg from 1,703 to 1,454 at 1,857.

In the short-term, the bullish phase remains in play, especially if gold prices continue to trade above the SMAs; however, the momentum indicators are suggesting a possible downside pullback.

In the bigger picture, the market has been strongly positive over the last four years.

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