FxWirePro: Gold Chart pack - Can it be triple top for bears or 9-months highs for bulls? Speculative and hedging vehicles

Gold price behavior has often shown tides and troughs as and when it hits strong support and resistances at 1215 and 1295 levels respectively. Evidently, double top formation with top 1 at 1295.46 and top 2 at 1296.06 & neckline at around 1212 levels has already been traced out. Now again, upswings are restrained below a peak of 1300 levels, thereby, we’ve figured out a shooting star pattern candle. So, we suppose if it can be top 3...? Prior to which the rallies have tested support at neckline with hammer pattern (refer daily charts).

The current prices are well above DMAs amid mild downswings, for now, the trend seems to be weaker in near run.

Historically, shooting star also pops up at the same resistance levels and consequently, dips have occurred upon this bearish pattern.

Both RSI and stochastic curves are signaling overbought pressures on this timeframe.

MACD, on the other hand, also signals uptrend likely to reverse at this juncture.

On a broader perspective, bulls in this bullion market have managed to bounce above 38.2% Fibonacci retracements from the lows of 1050 levels with a bullish candle with the big real body. Huge volumes are evidenced which is in conformity to this bullish sentiment.

RSI and stochastic curves are indicating strength in the uptrend with intensified momentum.

MACD on this timeframe is exactly adverse to the daily terms, this lagging indicator signals the consolidation phase to extend further with minor hurdles. After robust bearish trend, now seems to be consolidating above 23.6% Fibonacci retracement levels, stiff resistance is seen between 1285-1300, a breach above would be 9-months highs again.

Hence, we advocate buying boundary binaries with lower strikes at 1275 and upper strikes at 1295 levels.

The trading between these strikes likely to derive certain yields in this puzzling trend and more importantly these yields are exponential from spot movements.

For cash or nothing, these options would be exercised if the forward prices to remain between both strikes (i.e. 1295 > Fwd price > 1275).

Alternatively, we advocate longs in mid-month tenors on hedging grounds, In bullion market, gold futures (Comex) trimmed $1.05, or around 0.1%, to $1,293.59 a troy ounce. Earlier, the precious metal surged to its highest level upto $1,306.90 in the recent past.

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