Gold recovered after making a fresh low as it ended with gains of just over $9 in a ranged week also defending the support of red diagonal trendline which suggests a near term bottom formation. A lower dollar was the key reason for an upswing the yellow metal prices as risk-on intensified further with indexes making new all time highs. The move may have been just a pullback after a massive red bar but it sure does boost bullish bets as the supports were held comfortably with double bottom in place likely on weekly timeframe . To watch this week – Fed meeting minutes and other important data.
Gold had a green week after a mammoth red bar on account of a weaker dollar as it defended the support of the red diagonal trendline making a probable near term bottom. Fundamentals still does not support bulls fully but technically till the support is held gold can have a prolonged bounce which may result in a directional move as well. Till uncertainties remain (which is present) demand for yellow metal will remain elevated providing an extra cushion for bulls even in adverse/against scenarios. We have 2 scenarios –
1. Gold closed above the support, till this is held it can go to $1480. If this is crossed it can move towards $1495. And if this is taken out it can rally to $1510.
2. Gold may have made a near term bottom but once that breaks it can be sold for $1434 and $1420.
Bullish view – Bulls tried to make a comeback as they defended the support of the red diagonal trendline creating a probable double bottom or atleast a near term bottom. With fundamentals remaining less favorable its all upto the technicals, till the support is held gold can do a prolonged pullback and even aim for new highs.
Bearish view – Bears continued to attack as they were able to create a new low but failed to hang on to it mainly due to a lower dollar causing a stir again in the trend as a near term bottom might be in. For bears to remain in action they need to break the support and create fresh lows.
On larger terms, Gold has turned sideways and prices are expected to be rangebound until a direction is confirmed.
Possible trades are on both sides but mainly on upside, gold can be bought above $1475 for the targets of $1480 and $1495 with a stop loss placed below $1467. Longer term target $1510.
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 until the direction is decided.
Reference: Trading View
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