FxWirePro: Gold Chartpack – Technical, Trading & Hedging Setup

Bullion markets have relatively been quiet overnight, profit-booking after substantial gains is visible today. Gold prices plunged 0.77% to $1,908.00 an ounce today. This is predominantly because yellow metal’s inability to break out stiff resistance at $1,933.504 levels overnight that caused to book profits in a spur of the moment. The robustness in the US dollar is yet another factor to boost volatility.

Technically, gold price chart (XAUUSD) shows bounce back at strong support of 100-DMAs, currently, edged above 7-DMAs and trading at $1,904 levels (refer daily chart). Thereby, the current price continues to nudge below 7-DMAs again despite recent price rallies. Prior to which, as stated before in our recent post, bulls bounce back especially after testing the strong support at $1,445 - $1,455 levels and gold’s exhaustive rallies upon some bearish patterns.

On a broader perspective, although bulls break-out stiff resistances of 1511.36 level (i.e. 61.8% Fibonacci level), retraces almost 88.6% of December 2015 lows of (i.e. 1044.62) and August 2011 highs of (1922.88), the current prices spike off well above EMAs with bullish crossovers, the major uptrend now seems to be taking a halt for some time. Hence, no wonder even if the trend either drifts in sideways or plummets a bit. However, minor trend is likely to spike further.

Trade tips: At spot reference: $1,902 levels, on trading grounds, boundary options trading strategy with upper strikes at $1,918 and lower strikes at $1,883 levels. One can achieve certain yields as long as the underlying spot FX remains between these two strikes on the expiration.

Alternatively, on hedging grounds, we now reshuffle the hedging strategy with shorts in CME for December’20 deliveries as we could foresee downside risks amid geopolitical turmoil and the global financial crisis.