Technicals | May 19 2016
Bottom Line 18/05/16
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: 1225 / 1207 / 1193 / 1050 – 1100
Resistance Levels: 1313 / 1355 / 1400 / 1443
Technical Discussion
Gold is a very closely watched chart not only by our subscribers but by market participants globally in general. Price fluctuations can affect currencies, especially the U.S dollar which it frequently trades inversely to, and of course it directly affects the price moves in Australia's Gold related ASX stocks which have had a pretty good run in recent times. Yet where to from here ? Our views are still backing the bullish side of the ledger even though since February price action has been full of chop. Lets check in on the technicals
Reasons to stay neutral above 1194:
→ outlook has now improved above 1194, more so above 1400
→ sentiment has been strongly bearish yet the tide looks to be turning
→ major support zone holding
The cup and handle is still the pattern of choice which exploded higher as we headed into the new year. This pattern has been overlaid by a bullish pennant and also if we just wanted to isolate price action since February, a bullish looking symmetrical triangle that has now also broken to the upside. Even with all this happening, we still need to stay attuned that things can fail and start to break down again at the drop of a hat. Price has recently retested the triangle breakout, yet it still looks hesitant, especially under the influence of the two lines of resistance circa 1250 and 1313. These supply zones are obviously what has been causing some problems for price to turn impulsive to the upside again. 1225 is our line in the sand and this is where we presently have our stop position on our trades. Below here then all the bullish patterns we have spoken about start looking fragile. On the flip side a lower swing higher pattern from here that breaks above 1306 may well be the catalyst for price to finally kick into gear higher once more. So on a slight knifes edge right here, and it could go either way, yet we are sticking with the bullish analysis for now.
Trading Strategy
We continue to have two gold trades running on the long side. One via an aggressive entry at 1089 against the trend and the other more conservative at 1256 backed by the strong preceding upside price action witnessed. Yet we have had our stop positions on both trades below 1225 for some time now, as price action continues to consolidate. A little frustrating yet there is nothing we can do about it. We know the structures will start to break down below 1225 thus the strategic stop position, yet above 1306 should see price action move once again to the upside. In fact if you are not on board yet, taking on long positions above 1306 would not be a bad strategy. Yet as we already have two trades active in this market as well as Silver, we wont be formally adding the recommendation. Price now needs to swing higher to get things back on track.
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