FxWirePro: Gold’s Hammer Prolongs Range-Bounded Trend, Major Trend Hovers At 50% Fibos On Overbought Pressures

Gravestone doji, Hanging man & Bearish engulfing patterns are traced out at stiff resistance ($1,519.43) of Gold’s price (XAUUSD). These bearish patterns hamper 6-1/2 years highs, while hammer at $1,456 levels to counter with mild rallies and consequently, develops range-bounded minor trend (refer daily chart). The minor trend has been oscillating between range lows of $1445.51 and range highs of $1,556.88 levels.

On a broader perspective, the bullish perspective remains intact despite 3-4 months overbought pressures and the major trend has retraced from the lows of 2015 lows 1046 to the highs of October 2012 (refer monthly chart).

Monthly study suggests that we are dealing with a broader 3rd wave rally of higher scale, which will most likely extend to 1636 (i.e. 78.6% Fib.-projection).

The recent setbacks defended a minor wave 2 setback target at 1519 (minor 78.6 %), which suggests that Gold is ready to resume its broader up-trend straight away. 

The failure swings of this pivotal resistances have plunged and causing the risk of missing another setback into projected wave 4 setback targets in form of 38.2 % Fib.-retracements on different scales at 1446 and at 1406 persists. The breakdown of 1476 (50% Fibs in daily) would confirm a deeper setback, whereas any bounce back from the current levels should receive confirmation and pave the way for our favored bullish stance to a straight extension of the major uptrend.

Well, contemplating all technical rationale, on trading grounds, at spot reference: $1,476.88 levels while articulating, one can think of trading tunnel options spread with upper strikes of $1,484 and lower strikes at $1,464 levels.

Alternatively, on hedging grounds, we advocated rolling over long positions in CME gold contracts for Decemberr’19 delivery as we could foresee more upside risks amid global financial crisis.