Matt Simpson, CFTe, MSTA
CityIndex
Gold has continued to shine following the deeper correction on the Greenback, which now requires adjustments to the previous Gold analysis. Gold continues to shine
The previous analysis highlighted the potential for a Double Top which would target $1082 and was confirmed with a break below $1240. The idea was to seek any bearish setups up to this level to trade in the direction of the bearish pattern. However we also mentioned the potential for a larger pattern to be unfolding; The Descending Triangle which right now appears more likely.
A Bullish Piercing Line pattern formed above $1180 on W1 with a convincing break above $1240 required to invalidate the Double Top. We can see that price action has penetrated this level and now hovers around this key level. As these patterns are messy at the best of times I will allow for such noise around these levels which means the Double Top remains a possbility. However I'll concede for now that due to the price action leading up to $1240 I do favour another leg up and for the counter-analysis to come into play.
D1 provided a lower spike above $1221 which may be a swing low. Due to news expected to be light at the start of the week we run the risk of sideways/choppy trading which may provide a Bullish Flag or Pennant. If we do get the required catalyst for continued USD weakness then Gold will continue to be support and we can target $1258 and $1277. If we do reach these levels then we can reassess the Bearish Triangle and an eventual break below $1180.
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