FxWirePro: Gold extends 6-year highs despite display of gravestone doji – Trade boundary strikes and uphold long hedge

We raised a cause of concern for Gold’s (XAUUSD) rallies in the short run, in our recent write-ups. Bearish patterns, such as gravestone doji and spinning top are traced out at the stiff resistance levels of $1,528 levels. Although these bearish patterns appear to be hampering the prospective 6-1/2 years highs, the current major uptrend extends 6-year highs.

Gravestone Doji and Spinning Top candles have occurred at the peaks of the rallies of $1,527.05 and $1,501.23 levels respectively on daily plotting. Consequently, though the gold prices rallies are exhausted, buying sentiments are still imminent as the minor uptrend extends $1,525 levels. 

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, the uptrend has hit 6-years highs as per our previous prediction.

In addition, hammer occurs at $1,200 levels to counter double top formation on this timeframe.

Both RSI and Stochastic curves show upward convergence to this robust uptrend that signal intensified bullish momentum.

To substantiate this buying stance, the uptrend is likely to prolong on the bullish EMA & MACD crossovers.

Well, contemplating all the above technical rationale, on trading grounds, at spot reference: $1,536.50 levels, one can think of trading tunnel options spread with upper strikes of $1,550.27 and lower strikes at $1,524 levels.

Alternatively, on hedging grounds, we advocated long positions in August month’s CME gold contracts. We now like to uphold the same strategy by rolling over the contracts for September’19 delivery as we could foresee more upside risks amid the global financial crisis.