FxWirePro: XAU/USD (Gold) bears likely to hit multi-month lows on double top formation, capitalize on mild upswings to short

Despite an eventful summer and an almost 6% slide in gold price over the past three months, gold vols under-delivered across strikes and tenors. 

Technically, on intraday plotting Gold (XAUUSD price) formed “dragonfly doji” at $1,183.33 levels, consequently, bulls, for the day, have been attempting to break-out above 7-DMAs with considerable price upswings, but mild bull-swings are not backed by both trend & momentum indicators (refer 4H chart).

On the contrary, bears in the intermediate trend resume after failure swings at the stiff resistance & most likely to hit 20-month lows. Double top pattern has formed with top 1 at $1,375.04 and top 2 at $1,365.95 levels (refer monthly plotting). As a result, the current price on this timeframe, has slid below EMAs with bearish crossover. Amid this bearish journey, bears have shrugged-off the occurrence of hammer pattern.

After 3-years of consolidation phase, trend now seems exhausted again after back-to-back shooting star patterns at the stiff resistance levels, the major downtrend resumes upon bearish EMA & MACD crossovers (refer monthly chart). 

The more likely upside scenario for gold has returned multiples of this potential loss. With our forecasts still calling for a resumption of a synchronized global growth and hence a resumption of the medium-term trend lower in the dollar, we consequently maintain our bullish view on bullion. 

Hence, on hedging grounds, we advocate squaring off any long positions, instead, initiate shorts in CME gold contracts for Dec’18 delivery at spot reference of $1,185/oz.

Today, Gold futures are on sideways, though edged higher a little, clawing back from a steady slump that had nudged the underlying price of the precious commodity towards day lows at $1,182 areas, as a brawny dollar paused its advance but seems robust on Fed’s recent hikes. Hence, it is wise to capitalize on prevailing rallies to deploy fresh shorts.

Currency Strength Index: FxWirePro's hourly USD spot index is inching towards 121 levels (which is bullish), while articulating at 10:54 GMT. For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex