Gold made a massive green bar in a holiday thinned trade to close comfortably above $1500 after a gap of 6 weeks. The major contributor to this move was the weakened dollar as risk-on continued across the globe. With low volumes and even lower volatility it was certainly a one way up for gold with $1500 giving a minor resistance before getting conquered. As the year comes to a close gold resumed its bullishness mirroring its 2018 moves which makes it a great buy asset class again for 2020 given the returns it provided in the year. To watch this week – Fed FOMC meeting minutes and other important economic data.
On the chart –
Gold created a $30 plus green candle easily breaking through resistances to conquer $1500 again. Such a move quells fundamental led bearishness putting gold back on super bullish mode which it was since June as technicals were already bullish . A bullish breakout (flag) on weekly time frame further strengthens the trend. We have 2 scenarios –
1. Gold closed above the support, till this is held it can go to $1527. If this is crossed it can move towards $1541. And if this is taken out it can rally to $1554.
2. Short trades remain nullified after another bullish breakout except scalp trades.
Bullish view – Bulls reclaimed the lost glory as they conquered back $1500 on account of a weakened dollar with a huge green bar. Such a move cements the trend after a gap of few weeks as it led to another breakout which should lead gold back to the highs and even higher. This wave of bullishness is a mirror of what exactly happened in 2018 which again helps to single out the continuity of the trend. With technicals turning super bullish gold is expected to resume its course of $1700 plus again but for it to continue bulls need to defend the supports and aim for fresh highs.
Bearishness remains ignored in such a bullish scenario.
On larger terms, Gold has turned bullish and prices are expected to head higher.
Possible trades are on both sides but mainly on upside, gold can be bought above $1516 for the targets of $1527 and $1541 with a stop loss placed below $1506. 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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