Gold’s Worst Week in 3 Years Sees Bears Firmly Back In Control

Bulls failed to conquer key resistance at 1519.70 and prices have since rolled over. Given the series of doji’s, hammers and pinbars around this level it was apparent the level was a key focal point. Therefore, we warned that any weak break of this level increased the odds that price action remains in a complex correction. Yet it didn’t even break before bearish momentum returned. Furthermore, the 20-day eMA has crossed below the 50-day eMA and both of them are now pointing lower.

Having suffered its worst week in three years, bears are clearly in charge and momentum suggests we’re now in an impulsive wave lower. As the bias is for an eventual break to new highs, the bearish bias is over the near-term, and will later seek evidence the correction from the 1557.10 high is nearing completion.

The bearish channel can be used to aid with profit objectives.
If a double zigzag is presented, the 1411 - 1417 zone could be a viable target as this is around a 100% projection from the initial ABZ correction (wave equality) and also near the 200-day eMA.
If a deeper correction unfolds, we can also use the bullish trendline from the August low. That said, the 1381.91 -1400 zone should also be considered as potential support along the way.

Related analysis:

Gold Perks Up But It’s Not Out Of The Woods | XAU, GDX, KL, AEM, NEM
ASX200: The Long And Short Of It | XJO, NAN, NCM, BOQ, GNC
Weekly COT Report: Trade Optimism Supports CAD and AUD

Share: Analysis feed

CFD and forex trading are leveraged products and can result in losses that exceed your deposits. They may not be suitable for everyone. Ensure you fully understand the risks. From time to time, City Index Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material. As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed