Gold Correcting Lower From Resistance

Gold is reacting lower from levels close to longer term downward channel top. It is crossing below the upper Bollinger Bands and has reached a weekly pivot high at 1255.60.  This is the upper end of a weekly range that supported price in June and acted as resistance in October last year. The longer term weekly trend is down but in the medium term the price is trending higher. The last week’s candle is now a pivot high and therefore a resistance.

Gold, daily

The uptrend now broken Gold dropped lower from the sideways move and has now found some support, which should lead to a return move closer to the 1280 area. This level is a pivot candle low from 22 January and a likely resistance. The support levels are: 1255.50, 1240 and 1204 area. The 38.2% Fibonacci level coincides with 1240 support. Stochastics are close to oversold levels and with price reacting higher from this level it supports the view that a move higher could be in the cards.

Gold, 240 min

Over the last couple of days Gold has trended lower in descending trend channel. Now this move became over extended as it moved below the channel line and has since then retraced, reversing at 1255 region. There was a 4h Momentum Reversal candle indicating that the downside momentum was about to reverse. The nearest resistance level is at 1272 with the next one being right above it at 1279.

Conclusion

We now have a resistance area above at 1272 to 1280 that coincides with the weekly upper Bollinger Bands. I am therefore looking for short term (intraday to swing) shorting opportunities (Momentum Reversal Signals) at these levels with 1240 being a target level to cover the shorts. Those looking to add Gold to longer term positions might consider to do so at levels closer to 1200. Please remember to read the market and price action instead of trading blindly on someone else’s analysis. This applies to even my analysis even though it has been rather successful over the last four months. Only trade if the analysis agrees with your own observations.

 

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

Janne Muta
Chief Market Analyst
HotForex

Gold Correcting Lower From Resistance