Buy opportunities in Gold

If we look at longer term charts in gold you may spot that after a prolonged downtrend, Gold has been bullish since the end of 2015. It was going up in waves. Pressure up has been building steadily and any technical analyst will say that buying on dips is a perfect strategy for this commodity. 

Taking into account that the world is facing dangers of nuclear war, in my opinion gold has only one direction to go now, which is up. 

You may also see that having run to 1365 level it corrected to 1307 level, then bounced and then fell back slightly below 1307 and bounced again forming a bullish pin on a daily chart. I assume we will see another leg up in gold and sooner rather than later we may see a long term break of 1375 level and a strong move after that. 

So, to sum up, I expect a strong upward trend to resume in Gold and opportunities to buy it are excellent now. 

Disclaimer

Financial markets carry a high level of risk. Investor can lose all his money trading them. You should not invest money that you can’t afford to lose. Information on this blog is for information purposes and should not be regarded as an advice to invest.

 

Gold is Going Down in Waves

Gold went up in three waves during the month of August after a dramatic collapse in previous months. In the same fashion it has been going down since 21^st of August when the top was made at 1170 level. The first wave formed from the 21^st to 24^th of August where it found short term support at 1145. It formed a bullish pin there. 

However, price made another wave down in the next couple of days from 25^th to 26^th of August. It then went up to test previous support that became resistance. 1145 was well defended by gold bears and price after ranging till the 9^th of September proceeded to fall (third bearish wave). 

It looks like price has found its short term support at 1100 level. Bullish pin at support on Friday indicates that price may go to its previous support of 1115-1116 level (now resistance). 

Looking at a broader technical picture, it does not seem that the move down is over. We might expect one more wave down that would take the price of the commodity to 1080-1070 area. This is the area where gold bottomed in the months of July and August. The fall should stop at that area. 

Gold Reverses at Resistance

On the 20^th of July Gold found its’ bottom after falling sharply for around a month. You can see that from that moment on the commodity has been going up in waves by forming bases and then rising further forming another base. There have actually been three levels of rise. Resistance of the first level was at 1110, resistance of the second base at: 1127 and finally the security reversed at 1170 forming two peaks. The first peak formed railroad track pattern (bullish candle up and then the next one down engulfing the bullish candle). The second peak represents a failed attempt of breakout of previous high. Gold managed to break above the first high by around 1.5 dollar per ounce before collapsing to the first level of support at 1145. 

Railroad tracks and a bearish pin on 4 hour chart at resistance indicate that short term bullish trend is over and now gold price will head lower. Looking forward to next week we may state that resistance is now at 1145, where previous support was (according to rules of classical technical analysis). Support can be seen at 1125, 1120 and 1110 levels. I see 1110 as the strongest one and it will probably hold for next week. However, attempts to go above 1145 will probably fail and if one sees a bearish candle formation at that level, it will be a good signal to go short. 

Momentum: Bearish

Intermediate trend: Neutral

Gold forms bearish pin at resistance

Gold has been displaying bullish price action in the last couple of week. This one has been particularly strong. And there is no surprise about that. It fell dramatically in July. However, all of the losses have already been erased in these last two weeks. 

It is pretty logical that gold is taking a breather now as some long positions are being closed. We should expect some retracement, but as bullish inertia is quite strong we have a lot of support below starting with 1150, followed by 1136 and finally 1126. I do expect the last level to hold, not so sure about the first two. 

Expectations of rate hikes from US FED are slowly receding and having found support gold may continue rising. In the meantime I expect some consolidation and possibly choppy price action in the commodity. 

Strong resistance is seen around 1190 and 1200 levels, followed by 1205 and key one 1230 (18^th of May high). Profit taking in gold long position may continue into the beginning of next week: Monday to Wednesday, but buying pressure should come around the middle of the week.

Key economic data today: Bank Canada Consumer Price Index at 12:30 GMT and USD Markit Manufacturing PMI at 13:45 GMT

Bearish pin on Gold