Gold technical analysis Top-Down Outlook August 16, 2016

Gold Monthly Chart

GOLDMonthly 16 August 2016

This time, we want to look further into the long term chart of Gold, we can see a lot of resistance level located above the current level. The monthly chart tells us the medium term trend already changed to bullish since the breakout of the bearish channel, Gold rallying from 1046 easily to 1310 in 8 months gaining 25%. However, several weeks or months forward, there is two confluence level to watch.

First confluence level lies on 1380 – 1430 area, this area constructed by three resistance level:

  1. Trend line – Monthly trend line has broken on 2014
  2. Resistance level placed at previous swing high
  3. Fibonacci retracement level set at Gold record high – latest swing low (2015 lowest)

Second confluence level lies on 1480 – 1550 and this time its confluence between resistance level and Fibonacci retracement only. Compared to first confluence level, this level might not be as valid as the first one.

Gold Weekly Chart

GOLDWeekly 16 August 2016

Gold weekly chart nicely bull, break and retest should happen most of the time, but a break and with no touch to the broken resistance means a strong trend on the play. We can expect Gold charge to the confluence area shown in the Monthly chart, wait for confirmation of strong bearish pattern before placing any position.

Gold Daily Chart

GOLDDaily 16 August 2016

Gold paused below resistance even though USD index makes a drastic drop today. Fallen outside of triangle formation, Gold currently hovering without clear direction. The market might wait until the release of July FOMC minutes before committing to any position.

Special Note

In this article I update about Soros getting out of major 90% stakes in Barrick Gold Corp (ABX), Soros is a technical guy, and he plainly sees a cluster of resistance will not be good for the bull.

To achieve higher odds in Technical analysis, traders need to agree on the same picture, and more traders see the same levels the more reactive the levels. In monthly chart example of confluence there are two scenarios:

  • No change in current market sentiment, the price most likely will bounce as predicted.
  • A big change to the fundamental situation such as The Fed cancel rate increase and undergo interest-rate cut, A country starts world war 3, scientist found a cheap way to produce gold through a paper, and so on. Under this situation (except last one), gold will slice through confluence easily.

My rating for Gold long term: Critical, waiting for reaction near confluence area.

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