Gold 1 OZ (XAU=X) Momentum Shifts to Upside
Gold futures closed higher on Friday for no obvious reason other than aggressive speculative buying. Some bullish traders claim they are buying because of political, geopolitical and economic worries. However, we’re not seeing any buying in the safe-haven U.S. Treasurys and Japanese Yen.
Other traders are saying the buying is being fueled by speculators placing bets that an overbought stock market will eventually come crashing down. Still others feel that Phase One of the U.S.-China trade deal is weak and bound to fail.
Nonetheless, the gold market is still facing headwinds due to global equity markets at record levels, an improving Chinese economy and a strengthening U.S. Dollar. Gold also rallied last week despite improving U.S. economic data.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart; however, momentum is trending lower. A trade through $1536.40 will change the main trend to down. A move through $1613.30 will signal a resumption of the uptrend.
The minor trend is down. This is why the momentum is trending lower. The minor trend will change to up on a move through $1564.20. This will also shift momentum to the upside.
The main range is $1453.10 to $1613.30. Its retracement zone at $1533.20 to $1514.30 is major support.
The short-term range is $1613.30 to $1536.40. Its retracement zone at $1574.90 to $1583.90 is the next potential upside target.
The minor range is $1564.20 to $1536.40. Its 50% level or pivot at $1550.30 is providing some support.
Daily Swing Chart Technical Forecast
Based on Friday’s price action and the close at $1560.30, the direction of the February Comex gold futures contract on Monday is likely to be determined by trader reaction to the minor top at $1564.20.
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 1,513.84.
The projected upper bound is: 1,581.45.
The projected lower bound is: 1,534.92.
The projected closing price is: 1,558.18.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 30 white candles and 19 black candles for a net of 11 white candles.
An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with PREC.M.XAU=), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.
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 71.3436. This is not an overbought or oversold reading. The last signal was a buy 2 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 65.23. 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 sell 4 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 33. This is not a topping or bottoming area. The last signal was a sell 6 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 2 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAU= closed up 3.685 at 1,556.225. Volume was -0% below average (neutral) and Bollinger Bands were 67% 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: 1,556.86 1,494.55 1,437.09
Volatility: 12 10 14
Volume: 0 0 0
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 8.3% above its 200-period moving average and is in an upward trend. Volatility is 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 24 periods.