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Futures Trade Desk- Gold (XAU) Technical Review

Client Note

Gold (XAU) Technical Review

Trend: Mixed Momentum: Mixed Sentiment: Mixed Daily Trading Range: High $54 (3.2%)                           

Daily Simple Moving Average Lines: Blue (20 SMA) Green (50 SMA) Orange (100 SMA) Red (200 SMA) 

Gold (XAU) 4-Hour Chart

Gold (XAU) 4-Hour Chart

Technical Wave: The move lower from 1760 to 1550 was the A-leg of an ABC-Down structure that went on to set the B-leg up from 1555 to 1650, resulting in the C-leg test of support at 1520. If the next upside bounce fails to break near-term resistance at 1625, the December 2010 closing price at 1418 could be a potential target. The 1625 resistance area will now be pivotal for bullish and bearish traders alike. 

The near-term fundamental outlook remains mixed, with strong opinions on both sides as to the merits of holding or selling bullion. There are still compelling common-sense reasons to assume that dips will be bought, in-line with mid and long-term analysis that shows gold to be in a raging bull market. However, the near-term technical picture shows that shadow central banking cartels control valuations, and may not yet have finished suppressing Gold values.

Buy Support: Bullish traders will be looking to buy any short reversal to 1510, (the swing point area that has proven to be pivotal in trade this year), which could then target 1595 and 1625.

Sell Resistance: Bearish traders will be looking to sell long moves that fail at resistance around 1610 (the 38% Fiboncci retracement area from the move lower from 1760 to 1520) which could then target 1550 and 1520 (the recent swing point low), if global risk markets implode.

Overall: A technical picture that confirms bullion positions are being built for the long haul, but not without some serious tests of near-term support, as global markets are forced to constantly re-price equity and interest rate risk. The 3.2% of daily movement is keeping traders busy. Reversals to main support have been bought so far this year, and nothing suggest that will change, however volatile the intra-day moves become.

This Week: Look for the pattern of buying-the-dip to continue, but not without some major and consistent tests of support, and accept that news-headline related moves are dominating technical potential. The near-term trend and outlook is mixed, but many times this year buying opportunities have come from these set-ups. The intra-day trading range is extreme and signals that massive volatility remains a constant threat. The 200-day SMA area could offer the next main area of volatility if tested around 1625.

 



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