Gold Technical Analysis

Gold has been rallying non-stop for almost two
weeks despite some strong US data that pushed real yields and the US Dollar
higher. The decoupling with the usual drivers caught many wondering what could
it be that is moving the market into new highs every day. The latest push
higher though was justified by the big drop in the price index in the ISM Services PMI
yesterday, which quelled some inflation fears and sent real yields and the US
Dollar lower. The next big data to watch will be the NFP tomorrow and the US
CPI next Wednesday.

Gold Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Gold continues
to rally into new all-time highs with almost no pullbacks along the way. The
price got a bit overstretched as depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move. In this case, we might see a pullback into
the trendline where we
have also the confluence of the 50% Fibonacci retracement level
and the red 21 moving average. That’s where we can expect the buyers to step in
to position for new highs while the sellers will look for a break to the
downside to invalidate the bullish setup and position for a drop into new lows.

Gold Technical Analysis – 4
hour Timeframe

On the 4 hour chart, we can see that the latest leg
higher is diverging with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it could be a signal for a pullback into the 2222
level where we have the trendline and the Fibonacci retracement level. We can
also notice that the recent price action formed a rising wedge which is
generally a reversal pattern with the base as the target. The sellers will
likely pile in already on a breakout to target a pullback into the major
trendline and eventually a break below it.

Gold Technical Analysis – 1
hour Timeframe

On the 1 hour chart, we can see more
closely the rising wedge and the divergence with the MACD as this type of
pattern is divergent in nature. We can see that we have a support zone
around the 2288 level where we can find the confluence of the
bottom trendline, the previous swing high level, the red 21 moving average and
the 38.2% Fibonacci retracement level. This is where we can expect the buyers
to step in with a defined risk below the trendline to position for new highs.
The sellers, on the other hand, will want to see the price breaking lower to
position for a drop into the major trendline around the 2222 level.

Upcoming Events

Today we will see the latest US Jobless Claims
figures, while tomorrow we conclude the week with the US NFP report. Strong
data is likely to weigh on Gold, while weak figures should give it a boost.

See the video below

This article was written by FL Contributors at www.forexlive.com.