Technicals | Feb 23 2023
Bottom Line 22/02/23
Daily Trend: Down
Weekly Trend: Neutral
Monthly Trend: Up
Support Levels: US$1800 / US$1750 / US$1650
Resistance Levels: US$1978 / US$2060 / US$2213 (all-time high) (April 2023 contract)
Technical Discussion
Reasons to be bullish longer-term:
→ Multi-year triple three-corrective pattern looks to have finally completed back in November
→ bullish decade-long cup and handle pattern now well evolved on the longer-term charts and in play
→ support zone circa US$1800-$1750 now needs to hold
Well, we are about a month on from our last review and Gold continues to be a bit of a problem child! The highest open interest (O.I) is now with the April 2023 contract and all eyes are on the US$1800.00-US$1750.00 zone.
From a technical perspective if price can continue to trade above this area then we will continue to remain optimistic moving forward from here. Yet if this zone is broken below via a move that sticks, then we will certainly be reverting back to neutral at best, and bearish if buyers fail to surface from there.
We continue to label the move off the November lows as impulsive and therefore potentially bullish. Yet even though we are always encouraged by impulsive bounces off potential low points, it is the proceeding breather that always holds our interest the most.
What we mean by this is that the pullback off the initial 5-wave move needs to head back into our typical Fibonacci retracement zone yet no deeper. And in this case, the 50.0% – 61.8% pullback zone aligns US$1812.00 – US$1775.00 respectively. So the perfect area to witness a bounce from.
So all we can do from here is see if buyers can return and sooner rather than later. The dip off the recent highs has been a little too impulsive for my liking yet with our daily divergence indicator now back to well oversold, a bounce should now be very close to hand. And well needed if we are to remain optimistic moving forward.
A higher swing low pattern trigger post the next buyer response would then be ideal with such a trigger coming into play above US$1975.20. With such a move likely to take price up to major resistance and the all-time highs circa US$2213.00. It’s getting close to make or break time.
Trading Strategy
We remain long at US$1739.00 with stops sitting in some small profits circa US$1750.00 (adjusted to the new contract). As stated in our review we are ideally looking for price to find buyer support again around US$1800.00 so if this comes to fruition our stop position should be able to steer clear of any upcoming noise before the next move north takes hold. That’s the plan anyway!
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