Technicals | Jun 25 2020
Bottom Line 24/06/20
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: $1707 / $1672 / $1591
Resistance Levels: $1804 / $1959 / $1983 (August 2020 contract)
Reasons to be bullish:
→ upside price action looking solid off the August 2018 lows
→ bullish larger bowl / cup and handle pattern evolution remains ongoing bigger picture on the monthly chart
→ geopolitical risks / Covid-19 economic impact potentially bullish for gold
→ immediate box pattern breakout if we get it will target up towards $1950
There is actually a lot going on here technically across all time frames. Firstly we’ve taken our Elliott Wave count off the chart simply because I’m not comfortable putting a count on it. It’s all become too complex and one thing I’ve learnt over the years is that if a wave count is not clear, then do not force the issue. As the way you are positioning the trend will likely be wrong.
So off with the count it is, with a focus now purely on the patterns of both the longer term charts and the shorter term daily chart which is the one we are focused on tonight. The Darvas Box type pattern is immediately compelling. It has been evolving for about 10 weeks now and potentially building energy towards an upside breakout. The bullish breakout number is at [US]$1804. Which will then have targets up towards $1950 – $2000 via an equality move combined with the box breakout measured move. See more details in our trading section below.
The other larger bowl shaped pattern more clearly seen on the monthly chart is even more compelling if it keeps evolving the way it is. Yet this is one for down the track as it is still going to take many months before it completes and then sets up a longer term bullish pattern for us to get involved in. Part of its formation as well will include a major inflection occurring off our shorter term targets circa $1950 – $2000. One step at a time for now though, which means our focus more immediately is on $1804.
Based on the analysis tonight we are going to offer up a trading recommendation on the long side. So trade Gold (Aug 2020) futures contract at $1804 with stops placed at $1706. As mentioned, depending on the patterns being looked at, the initial target zone post breakout will be up towards $1950 – $2000. There is a tonne of supply up around these levels as well so it is a zone where we will be expecting price to take a breather from if and when it gets there. We will trail the stop for now yet get more aggressive with it as price makes its way closer towards target.
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