Gold 1 OZ (XAU=X) markets continued to absorb the potential effects of the coronavirus that is spreading throughout China
Gold prices moved higher on Friday as the markets continued to absorb the potential effects of the coronavirus that is spreading throughout China. A second case was uncovered in the United States ahead of the weekend. The dollar moved higher against most major currencies despite declining US yields that fell across all tenors. Riskier assets started to sell off as investors use the excuse of the spread of the coronavirus to take profits.
Gold prices moved higher pushing upward from a cup and saucer continuation pattern. This is generally a pause that refreshes higher. Short-term support is seen near the 10-day moving average at 1,557. Resistance is seen near the January highs at 1,611. The movement of the relative strength index (RSI) is positive and shows that the trend is moving higher with accelerating positive momentum. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the-red with a declining trajectory which points to lower prices.
China has increased its efforts to contain the new coronavirus. Travel has been restricted covering at least ten cities. China appears to be responding in a more transparent way than the experience with SARS in the early 2000s. Market participants are already turning their attention to the possible economic fallout.
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 1,520.74.
The projected upper bound is: 1,603.50.
The projected lower bound is: 1,557.00.
The projected closing price is: 1,580.25.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 30 white candles and 19 black candles for a net of 11 white candles.
A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend.
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 79.6957. This is not an overbought or oversold reading. The last signal was a buy 8 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 71.98. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 10 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 210.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 12 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 8 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAU= closed up 7.737 at 1,578.102. Volume was 8,900% above average (trending) and Bollinger Bands were 5% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1,559.99 1,506.64 1,445.65
Volatility: 6 10 14
Volume: 2,583 517 129
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= gapped up today (bullish) on heavy volume. Possibility of a Breakaway Gap which usually signifies the beginning of a major market move. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
PREC.M.XAU= is currently 9.2% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. 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 30 periods. Our momentum oscillator is currently indicating that XAU= is currently in an overbought condition. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.