The Technicals Driving Gold Right Now
Gold’s technical reversal signal
Last week gold retested major support around the $1780 region. However, sellers were unable to push the price lower and the daily price action on Friday suggests a near-term technical reversal. Now the fundamental outlook for gold gains needs the USD and real yields to fall lower for gold to really lift. You can listen all about that here in the video where the key drivers for gold gains are presented. However, in this article, we want to outline Gold’s technical reversal signal and show what the technical pathway may look like from here.
The daily chart has a bullish hammer reversal bar in place. The tail is more than three times the size of the body, the body is bullish, closed within the body of the previous candle, and there is plenty of space on the left-hand side of the candle.
Where might prices rise to?
When markets lack a key driver they can move technically until a fresh catalyst comes into place. So, in the absence of a key catalyst here is what can be reasonably expected from gold. The first target area would be up into $1825 / $1830 region with the break of the nose.
Where might buyers step in?
The first place would be on the break of the nose which has already happened. However, with a long candlestick, like the one here, the 50% retracement would be an obvious place.
The key takeaway here is that technically speaking, in the absence of any fresh fundamental drivers, the first retest of that $1825 region is not an unreasonable expectation. However, a big shift of any fundamentals remains a crucial risk that traders must be aware of.
About: HYCM is the global brand name of HYCM Capital Markets (UK) Limited, HYCM (Europe) Ltd, HYCM Capital Markets (DIFC) Ltd and HYCM Limited, all individual entities under HYCM Capital Markets Group, a global corporation operating in Asia, Europe, and the Middle East.
High-Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure.