Gold 1 OZ (XAU=X) Investors Aiming for Gold
Gold edged lower on Thursday as investors booked profits from sharp gains in the previous session, but prices held above the $1,700 an ounce level on the promise of more U.S. stimulus measures to ease the economic blow from the coronavirus crisis.
Shayne Heffernan Trade Idea
“As economic output contracts sharply, fiscal outlays surge, and central bank balance sheets double, fiat currencies could come under pressure.” Shayne Heffernan PhD in Economics
Why This Matters
Unprecedented central bank and government actions taken to stem the economic devastation of the COVID-19 pandemic will send gold soaring to $3,000 an ounce.
Governments around the world have issued “stay-at-home” orders to slow the spread of the virus, bringing major economies to a near standstill, and causing their gross domestic products to see the steepest declines of the modern era.
The economic malaise has forced central banks to slash interest rates and massively increase the size of their balance sheets to support their economies. At the same time, governments have run gigantic deficits in order to provide relief to taxpayers.
Additionally, Congress has passed three phases of aid, putting trillions of dollars into the hands of the individuals and businesses that need it most.
Gold prices moved higher and are poised to test resistance near the 1,747. Support near the 10-day moving average at 1,698. Short term momentum has whipsawed and turned positive as the fast stochastic generated a crossover buy signal.
This happened as the fast stochastic is printing a reading of 72. Medium-term momentum was turning negative but whipsawed and turned positive. The MACD (moving average convergence divergence) histogram is still printing in the black but now the trajectory is rising which points to higher prices.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 1,613.12.
The projected upper bound is: 1,798.24.
The projected lower bound is: 1,637.94.
The projected closing price is: 1,718.09.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 30 white candles and 20 black candles for a net of 10 white candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 62.9120. This is not an overbought or oversold reading. The last signal was a sell 5 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 62.07. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 24 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 71. This is not a topping or bottoming area. The last signal was a sell 4 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 0 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAU= closed up 1.855 at 1,715.306. Volume was 8,900% above average (trending) and Bollinger Bands were 40% wider than normal.
Open High Low Close Volume 1,712.745 1,718.150 1,703.800 1,715.306 26,541
Technical Outlook Short Term: Neutral Intermediate Term: Bullish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 1,705.57 1,626.15 1,533.33 Volatility: 19 32 20 Volume: 2,654 531 133
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
PREC.M.XAU= is currently 11.9% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods.
There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect very strong flows of volume into XAU= (bullish). Our trend forecasting oscillators are currently bullish on XAU= and have had this outlook for the last 13 periods.
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