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Mighty Gold Hovering Ahead of Key Support

Mighty Gold Hovering Ahead of Key Support, FP Markets

With the sell-off in US Treasuries, spot gold has taken a back seat versus the US dollar (XAU/USD) from recently printed record highs (US$2,685) and is establishing a picture-perfect AB=CD correction on the daily scale.

Daily ‘Alternate’ AB=CD Support

For any harmonic traders reading, you will likely note that the daily AB=CD in focus represents an ‘alternate’ AB=CD, an extended version of the equal pattern that completes around the 1.272% Fibonacci projection ratio of US$2,597.

Also technically appealing, aside from the uptrend favouring buyers, is support converging with the AB=CD structure at US$2,590 and neighbouring trendline support, extended from the low of US$1,984.

Regarding the Relative Strength Index (RSI), after reaching 77.51 (overbought – levels not seen since April this year), the RSI has rapidly dropped to within striking distance of the 50.00 centreline. Should the indicator make a U-turn off this area as price shakes hands with AB=CD support, this would be considered a positive hidden divergence and thus reinforce the noted support levels.

Short-Term Selling? Long-Term Buying?

Moving across to the H1 chart, resistance warrants attention between US$2,633 and US$2,631, positioned just north of local tops around US$2,624 (blue oval). Given the liquidity likely located north of these tops, a whipsaw beyond here into the H1 resistance zone mentioned above could be a bearish scenario worthy of pencilling in the watchlist given the scope to venture south on the daily until the upper edge of support from US$2,590. Alternatively, a move lower from current levels is equally possible on the H1 scale, targeting the daily support.

Therefore, according to chart studies, bears have the upper hand in the short term, though once/if price reaches daily support, this will likely shift the pendulum to a buyers’ market in light of the long-term uptrend, AB=CD correction and daily support area.

Mighty Gold Hovering Ahead of Key Support, FP MarketsDISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

 

 

 

 

 

 

  • Mighty Gold Hovering Ahead of Key Support, FP Markets
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