We recently raised a cause of concern for Gold’s (XAUUSD) rallies in the short run. We also stated about spinning top and gravestone doji that have occurred at the peaks of the rallies at 1423.48 and 1418.67 levels respectively on daily plotting. Accordingly, the gold prices dipped from the highs of $1,452.80 to the recent lows of 1,414.15 levels. But for now, the minor trend spikes through uptrend line and bulls again test uptrend line support (refer 4H chart). Subsequently, the current price spikes above 21-DMAs, while both the leading oscillators also signals further rallies.
The breach above $1,400/mt level on a perfect mix of ingredients, but the gold is driving up to the next strong supply zone of $1,450/1,500/mt in the medium-run.
For now, the strong support is seen at 1,421 levels, if bulls manage to hold these levels, then the uptrend is most likely to extend further, otherwise, we have all signs of steep slumps up to $1,350-$1,355 areas.
On monthly terms, bulls break-out the stiff resistance and hamper the potential triple top formation (refer monthly chart). As a result, the current prices spike off well above EMAs with bullish crossovers, thus, we could foresee the uptrend is most likely to prolong further to hit 6-years highs as both RSI and stochastic oscillators indicate the intensified buying momentum.
Hence, on trading grounds, at spot reference: 1,425 levels, one can think of trading one-touch call options with upper strikes of 1438 levels.
Alternatively, on hedging grounds, we advocated long positions in CME gold contracts. We now like to uphold the same strategy by rolling over the contracts for August’19 delivery as we could foresee more upside risks.
