Technical Analysis XAUUSD : 2014-08-20

Good afternoon, dear traders. Gold remains under the pressure for the fourth day in a row. At the moment the price could not overcome the support of 1291.86 dollars per troy ounce. The temporary stabilization is caused by the tension increase in the eastern Ukraine and by the outlook of new sectoral mutual sanctions imposed. As a defensive asset, gold can reduce macroeconomic risks of investors, which makes it more attractive. However, at the moment there is a large-scale drop in gold demand, due to low inflation expectations in the United States. The growth of Core CPI was lower than the forecast: + 0.1% vs. + 0.2%. Taking the general course of the US monetary policy easing into account, this resulted in the fact that the US dollar inflation risks have fallen. As a result, the investor’s interest in gold has reduced.


At the moment the price moves within the daily and weekly downtrends. Parabolic SAR confirms the bearish direction of the gold market. There is no contradiction on the part of the leading RSI-Bars. We expect that this indicator support breach 37% must precede the price intersection of the fractal level at 1291.86. This level is supported by historical values of the Parabolic SAR. The support at 1291.86 can be used to open a pending sell order. Risks should be limited at the mark of 1322.90, which is confirmed by the Parabolic historical values and fractal resistance.


The daily volumes of futures and options traded on the Chicago Mercantile Exchange are presented on the chart above. We can see that there is a weak uptrend that confirms the current price trend. Overcoming a peak of 200,000 contracts will provide a final momentum confirmation. You can monitor the trading volumes for gold futures by clicking here.

Little probable, but possible the trend to reverse, due to unforeseen fundamental factors, such as US-EU-Russia conflict aggravation. In this case, a strong bullish momentum is possible to happen: a long is to be opened above a new resistance at 1322.90. This mark intersection would mean the destruction of the weekly bearish channel, which gives the first signal of the trend reversal. After position opening, Trailing Stop is to be moved after the ParabolicSAR values, near the next fractal trough (long position), or peak (short position). Thus, we are changing the probable profit/loss ratio to the breakeven point. As soon as the breakeven point is achieved, the opposite order is to be closed.

Sell stopbelow 1291.86
Stop lossabove 1322.90

Buy stopabove 1322.90
Stop lossbelow 1291.86

Dear traders. You can see the detailed report of the author’s account by clicking here.


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