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)
Technical Discussion
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.
Trading Strategy
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.
Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena's (see our disclaimer).
This report may contain advice that has been prepared by The Chartist Pty Ltd (ABN 40 641 323 051). The Chartist Pty Ltd is a Corporate Authorised Representative (CAR No. 1282007) of Shartru Wealth Management Pty Ltd ABN 46 158 536 871, AFSL 422409. Any advice is considered general advice and has been prepared without taking into account your objectives, financial situation or needs. Because of that, before acting on this advice you should therefore consider the appropriateness of the advice having regard to your situation and your own objectives, financial situation and needs. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. If the advice relates to the acquisition, or possible acquisition, of a product (other than a security e.g. a CFD) then the client should obtain the relevant Product Disclosure Document and consider it before making any decision about whether to acquire the product. Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information.
Risk Disclosure Statement
THE RISK OF LOSS IN TRADING SECURITIES AND LEVERAGED INSTRUMENTS I.E. DERIVATIVES, SUCH AS FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER YOUR OBJECTIVES, FINANCIAL SITUATION, NEEDS AND ANY OTHER RELEVANT PERSONAL CIRCUMSTANCES TO DETERMINE WHETHER SUCH TRADING IS SUITABLE FOR YOU. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL OF THE RISKS AND OTHER SIGNIFICANT ASPECTS OF SECURITIES AND DERIVATIVES MARKETS. THEREFORE, YOU SHOULD CONSULT YOUR FINANCIAL ADVISOR OR ACCOUNTANT TO DETERMINE WHETHER TRADING IN SECURITES AND DERIVATIVES PRODUCTS IS APPROPRIATE FOR YOU IN LIGHT OF YOUR FINANCIAL CIRCUMSTANCES.
Technical limitations If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.
FNArena is proud about its track record and past achievements: Ten Years On
