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Gold’s weekly outlook: May 20-24

TVC:GOLD   CFDs on Gold (US$ / OZ)
Gold had a big week ranging over $28 finally ending with cuts of $8 closing near the lows of the week. The metal saw a huge upward rally on day one closing over crucial $1300 which was erased completely by following 4 down days resulting in failed attempt to break through the flag/pattern thus encouraging the bear cartel to persevere with the trend. The rejection at the top was inline with the trendline resistance making it even more heftier for any fresh upmove. The trend remains bearish and increases the potential for more incremental selling as gold was unable to breakout.

On the chart –

Gold had a failed attempt to breakout of the flag/pattern and adding to the woes $1300 was rejected comfortably indicating heavy selling pressure at the higher levels. This kind of move suggests the bearish trend continues to persist. We have 2 scenarios –

1. Bulls made a mockery of the initial rally as they failed to keep the prices afloat resulting in negative week and the price remaining inside the flag thus keeping the bearish trend alive.

2. Gold closed below the support, till this is respected it can move towards $1273. If this is broken it can move to $1260. And if this is taken out it can fall towards $1248.

Bulls had a failed attempt at the breakout making them stay at the sidelines again.

Bearish view – Bears clawed back over $28 from the highs continuing their assault as they prevented the metal from breaking out. The bear strength was clearly visible when the price hit the resistance of the trendline and collapsed even when fundamentals were not that supportive of such a fall. For bears to keep the trend intact they need to prevent gold from breaking out and new lows can be visited with next major support area being $1236-$1240.

On larger terms, Gold remains bearish and prices are expected to head lower.

Possible trades are on both sides, gold can be bought once it breaks out of the flag or at the bottom of the flag/channel.
Gold can be sold under $1273 for the targets of $1260 and $1248 with a stop loss placed above $1287.
A sell-on-rallies can be useful under current scenario.
Trade active: Trade Active
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