Gold 1 OZ (XAU=X) Surge Following US Attack on Iranian General
Gold prices surged on Friday following President Trump’s decision to order an airstrike that killed a powerful Iranian military leader. The preemptive action put pressure on riskier assets as Tehran vowed to avenge the death of General Qassem Soleimani. The action is likely just the beginning of geopolitical tensions that will escalate in the region. Gold prices are likely to continue to experience upward momentum as volatility in the capital markets rises.
Gold prices surged and tested the target resistance near the September highs at 1,535. The weekly charts on gold prices are poised to break out. Short term support is seen near the 10-day moving average at 1,507. The 10-day moving average recently crossed above the 50-day moving average which shows that a short term up trend is now in place. Weekly momentum is positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-week moving average minus the 26-week moving average) crosses above the MACD signal line (the 9-week moving average of the MACD line).
The daily RSI (relative strength index) is now printing a reading of 82, rising from 77 which reflects accelerating positive momentum. The RSI is above the overbought trigger level of 70, and also points to a potential future correction.
Tensions reverberated through the Middle East on Friday, with Tehran vowing to avenge the death of General Qassem Soleimani and its allies in Iraq pressing to expel US troops from the country. Iraqi Prime Minister Adel Abdul-Mahdi condemned the overnight strike, calling it a flagrant breach of the terms underwriting the presence of US forces in the country. The strike also killed Abu Mahdi al-Mohandes, the deputy head of the Popular Mobilization Forces, which is an umbrella for dozens of militias that are part of the Iraqi security apparatus but include factions that swear allegiance to Iran’s supreme leader.
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 1,494.01.
The projected upper bound is: 1,579.06.
The projected lower bound is: 1,525.63.
The projected closing price is: 1,552.34.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 8 white candles and 1 black candles for a net of 7 white candles. During the past 50 bars, there have been 29 white candles and 20 black candles for a net of 9 white candles.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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 87.0319. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 1 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 82.86. 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 92 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 157.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 20 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 buy 25 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAU= closed up 22.553 at 1,551.403. Volume was -0% below average (neutral) and Bollinger Bands were 72% wider than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1,513.37 1,481.40 1,423.98
Volatility: 9 11 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 8.9% 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 14 periods. Our momentum oscillator is currently indicating that XAU= is currently in an overbought condition.