Gold continued to consolidate by yet again forming an inside bar , saw its first weekly decline of 2019 as it closed with cuts of nearly $6. A mix of global fundamental news helped gold sway $15 from highs to lows as riskier assets saw a surge in demand on the last day of the trading week. The momentum is tapering off for the bulls but the trend hasn’t changed as gold continues to remain in the breakout zone.
On the chart –
Gold saw its first weekly decline of 2019 as the metal continued to trade in the range. Gold’s closing is not fully satisfactory for continued up-move as its at a very crucial support of the trendline which if breaks can lead to quicker price correction rather than time correction which gold currently is in. We have 2 scenarios –
1. Gold just managed to close above the support of the trendline , till this is held it can move back towards $1284. If this is taken out it can continue till $1296. And if this is conquered it can rally till $1308.
2. Short trades are not the choice of the season but once the support of the trendline breaks it can move till $1273. If this broken then it can fall till $1260.
Bullish view – Bulls failed to keep the price from having a red outing for the week but still they scraped through as the price closed at the support of the trendline . Bulls fought hard to preserve $1280 as the interest in riskier assets grew which was the catalyst for the week’s decline. For bulls to keep the trend intact they need to hold the key supports as well as continue to try for higher highs.
Bearish view – Bears finally managed to make a mark in the new year by eroding the price on weekly basis and nearly breaking the big resistance of the trendline . For bears to keep the pressure on they need to take out the trendline which will allow a brisker fall towards crucial breakout areas till then the downside is limited.
On larger terms, Gold remains bullish and prices are expected to head 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.
Short trades come into play once the trendline support gets broken for targets of $1273 and $1260 with a stop loss placed above $1284.
Reference: Trading View
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