Trading View | Gold’s weekly outlook: Jan 25-29
Gold again bounced back from the support and this move was broadly attributed to 2 things with the first being a continued fall in dollar and other being the uncertainty caused by the ongoing deadly pandemic. Last week’s important event of presidential transition was pretty uneventful in terms of the concerns it was roping in from days also failed to destabilize the gold as the focus shifted to an extra large stimulus on offing which in turn played the catalyst in the decline of dollar. Virus led fear might not reflect in current financial market as moreover everything is at or near to highs which can be another reason behind the lackluster movement in gold which should in actual terms fly given its safe haven nature since the situation post vaccination drive is not yet looking consoling as newer deadlier strains are raising questions regarding the effectiveness of current vaccines. And about the other geopolitical fundamentals, even they seem to never cease creating uncertainty. Things across the globe are looking equally gloomy as it was just a year back when the virus had started spreading and such similarity is due to moreorless exact copy of the spread by newer strains. In such a scenario gold remains the best investment asset class. To watch next week – Earnings , Fed meet, World Economic forum and other important economic data.
On the chart –
Gold made a dash towards the top of the flag again on lower dollar and added uncertainty but failed to break. This may look like a negative sign but again the pattern of inverse head and shoulders remains intact and in formation given the movement of the last week keeping the bullish trend alive. We have 2 scenarios –
1. Gold closed above the support, till this is held it can go to $1857. If this is crossed it can move towards $1875. And if this is taken out it can rally to $1886.
2. Bears tried hard again to push the price lower but failed suggesting the ongoing trend except scalp trades.
Bullish view – Bulls made another attempt to break out of the flag on back of a falling dollar and rise in uncertainty but failed to do so. The move should be seen as not a negative one but a positive as the ongoing pattern formation of inverse head and shoulders remains intact which in itself is a bullish conveyor other than very disturbing fundamentals/event which has been ongoing since a year. With both technical and fundamentals in favor of bulls they might not be kept inside the flag for a longer duration and once the flag breaks with a solid confirmation then it will be no looking back.
Bearishness continues to remain out of context.
On larger terms, gold continues to remain bullish and prices are expected to head higher.
Possible trades are on both sides but mainly on upside, gold can be bought above $1858 for the targets of $1875 and $1886 with a stop loss placed below $1848. Longer term target $1901.
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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