Technical Analysis
Dear followers and copiers,
over two months have past from my last Gold updated version of my
technical analysis, I think it is time to take a new look at the charts
and technical indicators to analyze what's happening to the gold prices
and try to figure out how to trade it.
The long term view posted in the last entry is more or less unchanged since my last analysis.
The uptrend looks still intact and probably 2500$ is the next long term target.
Medium Term View
During the last two years, after the temporary bottom printed from the
Gold Spot prices around mid August 2018 at around 1600$, the market
value of this commodity began to rise within a rising channel delimited
from the two ascending violet lines drew on Figure 1.
Lately the trend actually accelerated breaking out of the growth channel further accelerating toward the latest weeks, and printing a decade all time high.
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Figure 1: Gold Spot (weekly chart)
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In the medium term the RSI value is getting dangerously high (81) and might indicate that the prices are a bit over extended and will need some time to consolidate and work out the over-bought condition.
If a correction were to occur two major support levels could be considered at values around 1900$ first support, if that is breached then a stronger support could be considered at 1800$ and 1750$ (figure 2).
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Figure 2: Gold Spot Weekly chart with support levels indicated
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Short Term View
Figure 3 shows a bit more into details what happened during the last weeks and the two major, short term support levels.
The RSI reached record levels twice in a very short term, this is showing a big interest for gold but also that a consolidation phase is very likely on sight in the short term in order to workout the over-bought conditions and lower the RSI values.
I would suggest some caution if you were interested in increasing your positions on gold or gold miners right here and now.
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Figure 3: Gold Spot Daily Chart
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COT - GOLD
The analysis of the Gold speculative net positions show a very high
number of contracts net long, but far lower from the top of above 350K contracts, we are now at about 239K.
This is a positive indication as the gold prices broke out during a relatively decreasing speculative buy positioning.
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Figure 3: Gold COT
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US-Dollar Index
Figure 5 shows that after the COVID-19/OIL collapse in March the index
shows a "blow-off" top due to the safe-heave status from which the USD
benefits toward most of the other fiat currencies, maybe except for the
Japanese Yen.
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Figure 5: USDOLLAR weekly chart
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The dollar index shows a clear breakdown from the ascending trend happened on July that is extending to August and might indicate a longer term trend which is in favor of higher gold prices.
It is in fact most likely that the latest new record high levels of the gold is mostly due to the weakening of the dollar.
Conclusions
- Late summer is typically a good moment for gold prices from a seasonal point of view
- the breakout of the gold prices to new highs in recent days is mostly due to a weaker dollar than other factors.
- the RSI index and the speed of the breakout would suggest some caution with the timing of the gold trading, we might be entering soon a new consolidation phase.
- Entry points for gold trades might be if gold correct and reaches values close to the two indicated supports: 1900$ and 1750$.
- The general trend of the gold long seems to be higher but caution is paramount in this phase of the development.
I thank my Copiers and Followers for the confidence and I wish you a great time moving forward.
Daniele
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The graphs and prices shown in this analysis were taken using as a
source www.etoro.com, the platform I am using for my trading as
DanieleTrader.
Whoever is interested to follow my trading activity there is
welcome to subscribe to the platform using the following link and follow me or Copy-Trade my activity:
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Disclaimer
The content published in this blog represents my personal view.
It
is intended for information and educational purposes only and should
not be considered investment advice or an investment recommendation.
The reader is solely responsible for his/her investment choices.
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