Gold finally broke out from the 3 week consolidation as it gained $28 in the week ending back above $1500 comfortably as geopolitical tensions continued to bite. Adding to the stockpile of tensions was a fresh spat between U.S and China on trade issues which fueled the last day rally again creating insecurity during the weekend. Negative surprises continue to pop up from the “Pandora’s Box” as tensions revolving around Middle East takes the center stage which can be considered as yet another factor for prolonged bullishness. Technically gold took the support of the Moving Average and the diagonal black trend line suggesting a fresh leg of upmove ahead. To watch next week – UN Assembly and other important data.
On the chart –
Gold resumed the uptrend as it broke though the consolidation whilst taking support at crucial moving average and pattern trend line indicating a base formation at lower levels. With trade and geopolitical tensions invading every now and then its highly likely for gold to continue moving higher as investors continue to bank on the safe haven. We have 2 scenarios –
1. Gold closed above the support, till its held it can move to $1527. If this is crossed it can rally till $1541. And if this is taken out it can rise towards $1554.
2. Short trades showed some interest but it faded out again after the breakout in lower time frames.
Bullish view – Bulls got back to winning ways as they conquered $1500 again after a very brief fallout which adds on more weight to the ongoing bullish trend . With U.S Fed presenting a dovish stance after another rate cut, it further propels the idea of a weaker dollar thus bullishness for gold prices. Fundamentals continue to support higher price as global tensions refuse to cease along with technical supports of the moving average and continuing pattern which should make $1800 look really close.
Bearish bets again wandered off the table as gold remains in uptrend.
On larger terms, Gold remains bullish and prices are expected to head higher.
Possible trades are on both sides but mainly on upside, gold can be bought above $1521 for the targets of $1527 and $1541 with a stop loss placed below $1510. Longer term target $1554.
Dips towards support (and breakout region) can be used to create longs for the above mentioned targets.
Shorts can be useful for scalp trades only.
Reference: Trading View
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