Gold gets up and dusts itself off
Joe Perry March 10, 2021 5:49 AM
XAU/USD seems as if it has been marching to the beat of its own drum lately.
Gold (XAU/USD) has been getting knocked down lately, and no one is quite sure why. Gold moved lower when stocks moved higher, moved lower when stocks moved lower, and today moved higher when stocks moved higher.
Regardless, after the precious metal was beaten down to the bottom trendline of the downward sloping channel which began in August 2020, Gold was able to bounce nearly 2%, back above 1700, to near 1715. Notice that the bottom channel line confluences with the 61.8% Fibonacci retracement from the March 16th pandemic lows to the post-pandemic highs of August 7th, near 1692.2. In addition, the RSI was in oversold territory, which was another reason to expect the bounce.
Source: Tradingview, City Index
On a 240-minute timeframe, Gold has been moving lower in a descending wedge since February 18th. The expectation is that price will break out of the descending wedge in the opposite direction as price nears the apex. Today price broke out. The target for the breakout of a descending wedge is 100% retracement of the wedge, which would be near the 50% retracement of the move lower from January 6th to yesterday’s lows, and horizontal resistance, near 1817.50. However, price must first beak through horizontal resistance near 1760 (which also confluences with horizontal resistance on the daily chart) and the 38.2% Fibonacci retracement level from the previously mentioned timeframe near 1785.
Source: Tradingview, City Index
If price can’t continue high and bears step in, the first support level is the March 8th lows, which confluences with the downward sloping trendline of the descending wedge (and the bottom trendline on the daily timeframe), near 1678. Below there, price can fall to horizontal support from March 2020 near 1643 and then horizontal support dating back to August 2019, near 1555.
XAU/USD seems as if it has been marching to the beat of its own drum lately. However, the technicals seem to have been working. If proper risk/reward management is used, Gold can be a profitable trading asset.
Learn more about gold and silver trading opportunities.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.