After Gold lost a critical support, will its counter-trend moves keep up?
DISCLAIMER: I am not a financial advisor nor certified analyst, and definitely not a pro trader. All contents discussed on this article are solely my own views and for trading education/entertainment purposes only. Trading and investing in Precious Metals/Commodities especially in form of CFDs are extremely risky where losses can exceed deposits. Enter with discretion. Do your own utmost researches and due diligences. The basis of this article is pure technical analysis speculation.
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The title of my Finlogix article today is questioning the good old Gold of where it might be heading. Join me as I share my latest technical analysis on the Yellow metal. I try to get some answers on questions like is Gold’s current price action for short-term only? Or are we heading for a long-term down trend?
Gold is undeniably one of the investors’ go-to safe haven assets. A traditional choice especially in times of uncertainty like war and bigger global economic turmoil. The on-going Russian Ukraine war sounds familiar?
Personally, Gold charts can really be tough and tricky like any trading instruments. If we try to look its historic price levels, the precious metal is still clearly in a bullish market cycle! I think its current price action are just mere pullbacks given the fact that in a normal bullish market, they are healthy occurrences.
It will be foolish to say too that Gold’s rival is Bitcoin! As the latter is the digital version of the former by many market speculators. It cannot be compared! It is like comparing Crypto to the Forex markets! Of course, both are hedges against inflation and face the same rival, the US dollar which is having a slow down week and too early to tell that its uptrend rally is over. The Greenback is still having a bullish July. However, the Gold is down in 4 months after achieving a new yearly-high.
After the Gold daily chart printed a fresh 247 bars on July 21 (yesterday only), zooming out back to monthly view, I can confidently say that it is hovering near the lower boundary as support! There is a picture perfect range bounds on the XAUUSD monthly chart where August 2020’s peak as our resistance base and we saw Gold tried to re-test its all-time-high this year on March and got rejected again in similar fashion. Fractals do occur in technical analyses and although cannot exactly have the same degree, what we have witnessed recently with Gold’s July lowest is connected the drops on August 2021, March 2021 and if we include the June 2020 lows prior to its July 2020 breakout that lead to its ATH, all makes sense to me that the metal just had another long-term support back-tested by the bears.
So far it is found to be wanting and buyers were found reactive.
Back to the daily charts, after the critical long-term 23.60% fib support $1,770-75 levels got assassinated on July 5, strong descending parallel channels are formed creating both lowering highs and lows. Price traded in range for more than 24 hour after the fall but sellers proved to be too strong resulting for more droppings forming the said channels.
Since bearish pressures in current control now, I am anticipating a back-test on the Gold’s lower support boundaries then we consolidate. As long as we hold above these long-term supports, counter-trend attempts will have probable success.
I will put a long order at $1,675 mark and risking at $1,600 as my close stop loss. I speculate a price free fall once $1,650 is obtained and by then, the August month candle fails to make a double bottom candle structure and more southward directions! This stop loss level can be worth a try. My take profit point is at the long-term 38.20% fib level adjusted to $1,830 should Gold make a comeback. An overall risk:reward score of 2.06-7.
Original article source:
https://www.finlogix.com/analysis/20220722/will-golds-its-counter-trend-moves-keep-up
Read my previous analysis:
