Bottom line: Gold long term outlook has turned bearish against $2075 resistance. The yellow metal is seen to be pulling back after printing lows around $1848 over the last week. Bears might remain poised to be back in control after the counter trend rally terminates around $1920/30 mark.
Fundamental Outlook:
Gold has managed to push higher close to $1920 mark yesterday, before finding some selling pressure again. The metal, along with most risk assets and risk related currency pairs rallied on hopes of another round of US Fiscal Stimulus package. It remains to be seen if the above optimism continues, going further.
Technical Analysis:
Gold had carved a meaningful top around $2075 on August 07, 2020. This was confirmed last week, when the yellow metal had broken below $1862 lows. Bears might have been successful in carving an impulse wave from $2075 highs, on the daily time frame.
Gold had been trading in a triangle consolidation for several trading sessions after having dropped sharply from $2075 highs through $1862 lows. Bears were finally successful in breaking below the triangle consolidation last week, printing fresh lows around $1848.
High probability remains that the metal is producing a corrective wave and might reach $1960/70 levels in the near term. Also note that fibonacci 0.618 retracement of the entire drop between $2075 and $1848 is seen passing through $1990. High probability remains for a bearish reversal if prices manage to reach there.
Most traders might be preparing to initiate fresh short positions around $1950/70 resistance zone with a protective stop above $2075 and projected targets below $1670 levels respectively. Only a break above $2075 would change the above bearish structure.
Prepared by
Harsh Japee, Technical Analyst.
Gold Chart
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