Technicals | Apr 20 2023
Bottom Line 18/04/23
Daily Trend: Neutral
Weekly Trend: Up
Monthly Trend: Up
Support Levels: $1950 (?) / $1828 / $1750
Resistance Levels: $2077 / $2193 (all-time high) (June 2023 contract)
[All prices US$/oz Comex futures 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
→ watching for the possibility of a $1950 breakout retest over the next week or two?
We have now rolled over to the June 2023 contract which has the highest Open Interest (O.I). Since our last review, the Gold chart is continuing to evolve very nicely from a longer-term bullish perspective which is encouraging to see. As such our view remains steadfast that the November 2022 lows are significant, and the completion of a complex sideways to down very drawn out corrective phase. As such we continue to label the bounce off this major low point as an intermediate Wave-1 or A high followed up by a corrective Wave-2 or B. With the most recent impulsive move north being labeled as a minor degree wave-(i) of 3 or C.
So the labeling and positioning of trend we are running with here is clearly bullish longer term until price action tells us otherwise. More immediately the pattern of interest is a rising wedge pattern that looks to have completed as part of a minor degree wave-(i) high locking in (see chart). These formations are short-term bearish with price action last night triggering the pattern via a push below the lower boundaries. By definition post-trigger, these patterns frequently head back towards where they started, which in this case is a price point that has confluence to support / resistance aligned to $1950.00. So $1950.00 is what we now have our eyes fixated on now as part of an upcoming minor degree wave-(ii) corrective move.
The other interesting technical feature of the chart which we also highlighted in our video tonight, is that the processes involved in forming the rising wedge have also bought some strong Type-A bearish divergence to the table. So all in all there are a number of factors suggesting that some minor weakness is on the way with a retest of support /resistance circa $1950.00, or perhaps even a little lower, being high probability. Such a move should also unwind our negative divergence back to oversold over the next week or two. Then if we witness a successful retest with buyers coming back into play, this could be the start of a very impulsive/bullish wave-(iii) of 3 or C which will finally take price well and truly into new all-time highs. Nothing is ever a given in trading, yet right at this juncture the longer-term patterns are continuing to look very solid.
Trading Strategy
We remain long at $1739.00 with stops still sitting in some small profits circa $1750.00. We continue to be very conservative with the stop position yet if the projections we have made in tonight’s review come to fruition and price successfully retests $1950 support/resistance before swinging higher yet again, then we will be raising our stop substantially higher to just below where ever the proposed wave-(ii) decides to lock in a low. The trade continues to look very promising.
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