Gold Reversal - Medium Term Bullish Outlook
Updated
Entry and Exit Strategy are highlighted at the end of my analysis.
The following analysis points out that a bullish reversal in gold is likely. My analysis a couple of weeks highlighted that a reversal was imminent, however, my analysis was slightly too early. As such, I have re-evaluated my position and analysed fundamentals in the market to better gauge what will move markets this month.
The US dollar index, DXY, is poised for a bearish reversal. On a weekly chart, it is showing the first bearish candle in a while. Currently, there is little evidence to suggest a continuation in the bullish trend for the USD. The Turkish Lira is in a free fall one minute and reaching for the sky the next minute. Subsequently, Turkish equities, debt markets, basically any securities tied to Turkey have the same status as shitcoins following the BTCUSD collapse. This is particularly buoyed by perhaps the two most stubborn and misguided administrations in politics and economics currently: Trump and Turkish Government.
There is also so much other fundamental analysis that can be discussed but I will save it for now and highlight it another time. So, on to the technical analysis...
On the chart, as you can see, is one of my favourite reversal chart patterns - the bump and run. This is particularly strong as the trend is always bound by the lower support line, for a continued period of time. In this case, the down trend began in the second week of May (over 3 months ago) and the bearish bump only lasted a week or two at most. These are common signs of the bump and run chart pattern. The bears in this case, had their final push lower before conceding. This is particularly enforced by the extended hammer candlestick followed by an immediate bullish engulfing and continued bullish candlestick.
My previous analysis highlighted that was significant divergence on RSI, Momentum and MACD. Although it continued lower and corrupted all my analysis, it is still a really strong sign of market indeterminacy and conviction. This was also supported by the lower volume levels, the strongest indicator showcasing reversals or continuations. To strengthen my analysis and confidence in this reversal, I have illustrated two contingent measures to increase the likelihood of a reversal confirmation. The first being, there must be a close above the the existing black trend line. A full close above it, there candle should be fully above the trend line. This would be around the 1187/88 mark. The other measure, is that XAUUSD must close above the conversion line (blue line) on the Inchimoku overlay. Again it must be a full close above no body or low of the candle should touch the conversion line, when these two conditions are met, there is a high likelihood of a bullish reversal or at the very least a 20-40 point re-tracement.
As such, I have illustrated an entry and exit strategy given all the available information.
Outlook: Bullish
Time Frame : 3 weeks - 3 months
Entry Price: $1190 -1195 (contingent upon conversion line and trend line cross over)
Take Profit: $1299
Stop Loss: $1160
As always, this my analysis, please comment and follow my posts, I always read your comments (and criticisms) and try to incorporate your thoughts into my analysis for future posts. If you would like any specific markets to be researched or analysed, write a message and I will get back to you.
The following analysis points out that a bullish reversal in gold is likely. My analysis a couple of weeks highlighted that a reversal was imminent, however, my analysis was slightly too early. As such, I have re-evaluated my position and analysed fundamentals in the market to better gauge what will move markets this month.
The US dollar index, DXY, is poised for a bearish reversal. On a weekly chart, it is showing the first bearish candle in a while. Currently, there is little evidence to suggest a continuation in the bullish trend for the USD. The Turkish Lira is in a free fall one minute and reaching for the sky the next minute. Subsequently, Turkish equities, debt markets, basically any securities tied to Turkey have the same status as shitcoins following the BTCUSD collapse. This is particularly buoyed by perhaps the two most stubborn and misguided administrations in politics and economics currently: Trump and Turkish Government.
There is also so much other fundamental analysis that can be discussed but I will save it for now and highlight it another time. So, on to the technical analysis...
On the chart, as you can see, is one of my favourite reversal chart patterns - the bump and run. This is particularly strong as the trend is always bound by the lower support line, for a continued period of time. In this case, the down trend began in the second week of May (over 3 months ago) and the bearish bump only lasted a week or two at most. These are common signs of the bump and run chart pattern. The bears in this case, had their final push lower before conceding. This is particularly enforced by the extended hammer candlestick followed by an immediate bullish engulfing and continued bullish candlestick.
My previous analysis highlighted that was significant divergence on RSI, Momentum and MACD. Although it continued lower and corrupted all my analysis, it is still a really strong sign of market indeterminacy and conviction. This was also supported by the lower volume levels, the strongest indicator showcasing reversals or continuations. To strengthen my analysis and confidence in this reversal, I have illustrated two contingent measures to increase the likelihood of a reversal confirmation. The first being, there must be a close above the the existing black trend line. A full close above it, there candle should be fully above the trend line. This would be around the 1187/88 mark. The other measure, is that XAUUSD must close above the conversion line (blue line) on the Inchimoku overlay. Again it must be a full close above no body or low of the candle should touch the conversion line, when these two conditions are met, there is a high likelihood of a bullish reversal or at the very least a 20-40 point re-tracement.
As such, I have illustrated an entry and exit strategy given all the available information.
Outlook: Bullish
Time Frame : 3 weeks - 3 months
Entry Price: $1190 -1195 (contingent upon conversion line and trend line cross over)
Take Profit: $1299
Stop Loss: $1160
As always, this my analysis, please comment and follow my posts, I always read your comments (and criticisms) and try to incorporate your thoughts into my analysis for future posts. If you would like any specific markets to be researched or analysed, write a message and I will get back to you.
Trade active
On the 4h chart, Gold has broken both trend lines, now is a good time to take a long position. The ichimoku conversion line has crossed the base line on the 4h chart highlighting that the down trend is confirmed to have finished.
For those who like to take a bit more risk, now is the time to take a long position. I expect that Gold over the next 24 hours will rise quite strongly. Particularly for the US market open.
Trade active
OFFICIAL ENTRY:Both conditions met on daily chart. Official buy trade has been set up, I will update weekly to highlight any further changes in the take profit or time frame for trade.
Note
Keep Going up....It appears wave 1 and 2 have appeared within a potential elliot wave chart pattern. Expect an extension on wave 3 or 5 quite soon. Another 25 points or so in the next couple of weeks before a proper re-tracement.
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