Technical Analysis – Gold – Downside breakout

Sep 2, 2014 - 9:30 AM GMT
by
Short Term:
Medium Term:
Long Term:
Resistances:
R1 1,280 July low
R2 1,282 7 DMA
R3 1,285 50% Fibo
R4 1,291 September low
Support:
S1 1,272 August low
S2 1,268 Lower BB
S3 1,261 61.8% Fibo
Stochastics:
Legend:

BB = Bollinger band 
U/DTL = up/down trend line
Fibo = Fibonacci retracement 
MACD = Moving average convergence/divergence

Analysis

  • Gold’s break back below the 7 DMA at $1,282, which had been shaping the price lower, suggests a return of short-term downside pressure. 
  • The stochastics, MACD and momentum have all turned lower, signalling renewed downside strength. 
  • The BBs are diverging strongly so further consolidation is likely. 

Conclusion

  • Gold has broken lower from consolidation between the 7 DMA and the September low at $1,291. This sign of renewed selling pressure has returned us to a neutral-negative stance.
  • A break of support from the August low at $1,272 would confirm renewed selling strength; we would then look to turn negative and cite support at $1,268 and $1,261 as our next downside targets.
All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.