FOREX Chart Of The Day: Gold Prepares To Rally
Do you trade Gold?
The price of the commodity fell as news of a vaccine circulated but what is the price doing now?
Watch the video to learn more…
Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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In this video, we’re going to go over XAU as the price has failed to break any lower.
So, we’re looking at XAU for a while now. We discussed the potential for the market to bounce from the previous highs and rally to the upside. What we looked for was the fact the price had recently broken out of this structure point, and we were looking for that to be our instigator for higher prices.
This candlestick here, was the news of a vaccine last week, which caused the XAU prices to sell-off. We had some further vaccine news but from a different company this time. However, XAU didn’t react in the same way.
This makes me think that XAU is still very much a market that I want to be a buyer of.
So, if we just take a look at this from a technical point of view, we can see that the price continues to bounce from this 1860-1861 level. This was the level that we were watching before in case the price did trade below it and on the election. If the price did trade below, we were looking for a bit of a drop further in order to look for long opportunities because we wanted to buy based on the seasonal fact that towards the end of November and start of December, XAU typically looks to rally. The price just stayed above 1860, which is great because we want that seasonal place.
So, how can we look at this now that the price is just continuing to find some support? What we need to see is some kind of high to come out of this.
Now obviously, we did get that breakout higher. Unfortunately for us, there was that headline news that took the market by surprise, and we saw that dip to the downside. What we can look for is a nice change in the cycle on the daily timeframe. So what I’ll be watching out for is if this market goes to act as it is or if this move, here, acts as a double bottom. If you start breaking back above that 1900 US Dollar area, then I’m happy to start looking for those long positions.
Now to confirm, I suppose that longer-term move, we could look for this break out of this trend line as well. So, the prices of that sit around 1955. If we can get above 1955, then we’ve got another good run-up to form here.
Now, the US Dollar is looking very bearish. The amount of times the US Dollar index has retested the 90-92 Dollar area and not broken to the downside yet, but the amount of times it has retested suggests to me that we are going to see a breakout there at some point, which could also add fuel to XAU moving to the upside.
But, for me, at the moment, XAU is a potential long opportunity. I like the fact that we’re at 1860, still.
Let’s wait for further confirmation. Some new highs to be formed around that 1900 US Dollar level. If we can break out of that, that will be a great level to look for further long opportunities on this commodity.
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