Gold formed an inside bar as it continued to consolidate gaining nearly $3 for the week where it swung $17 from highs to lows finally closing well above the support. The movement was data driven due to the volatility in dollar index caused mainly by American fundamentals. Even in such a week bullishness was the winning trend as the long term trendline was respected which is acting as a massive support. The week has this year’s first major fundamental event – “Brexit deal vote” which can sway the prices big time in either direction.
On the chart –
Gold made another attempt towards $1300 but failed short by more margin than previous week making a triangle formation as it also was unable to fall towards the lows of last week. After such a big move consolidation was expected as the lead indicators were in overbought territory though the overall trend remains intact as support was held onto effectively. We have 2 scenarios –
1. Gold closed above the support yet again, until this is held it can go towards $1296. If this is crossed it can go higher to $1308.
2. Short trades remain active but are losing steam as supports fail to give way and are confined to scalping. A positional short trade can open only once the support breaks.
Bullish view – Bulls made another dash towards $1300 but were denied the crucial mark still they had the week to their favor as the support of the long term trendline was held along with holding of an important support level of $1284. The bulls continue to receive ample reinforcements in shape of a falling dollar index as well as rising fear of recession. For bulls, to go higher they need to take out the high as that would make gold breakout from the consolidation range.
Bearish view – Bears denied the rush towards $1300 again but with a higher margin stiffening the supply zone . Though they are out of play a break of support will ring the bells for them as it would open positional trades which have been long gone.
On larger terms, Gold stays in the grip of bulls with prices expected to move higher.
Possible trades are on both sides, gold can be bought above $1284 for the targets of $1296 and $1308 with a stop loss placed below $1267.
Reference: Trading View
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