On February 12, Gold (XAUUSD) rebounded strongly to the previous area of $1820/oz – $1830/oz. During the start of the European session on February 15, gold was trading around $1818/oz.
The strong performance comes from the good news about the third stimulus package worth around $1.9 trillion that is expected to get approved later this week. The DXY – US Dollar Index, had decreased after news about the economic stimulus package, after a week of strong increase as a result of information about economic recovery.
Boosting vaccination and excellent control of the coronavirus crisis in countries like France, the UK, Japan, the US, Germany, and Spain.
Trend Analysis
Based on the daily chart, the ‘triangle’ is yet to be broken. This ‘triangle’ has been made by an Uptrend that formed from April 2021 and a Downtrend that formed from August 2021.
Nonetheless, the price band is quite narrow, around $40 per ounce. Gold price continues to accumulate at $1810/oz – $1828/oz on the 4-hour chart. There is no significant sign of a breakout.
Support/Resistance Analysis (Supply/Demand)
After breaching the support at $1830, the gold price continued to retest the old support at $1815. Currently, support has formed at $1815 but it is quite weak. Thus, investors and traders should now consider a more reliable trading strategy at the $1790 zone.
Resistances have formed at $1830 and $1875 while supports are located at $1815, $1790, and $1760.
Fibonacci Analysis
The Fibonacci is determined on the daily charts and it is located at the 2070/1760 level. After encountering two weeks of strong fluctuations, the price of gold abruptly exploded out of the Fibonacci 23.6 and went down.
This movement shows that a strong factorial to push gold prices down seems to have appeared in the market. Today, investors should know that gold has two resistance zones. The first one is the Fibonacci psychological resistance and the second one is the strong support resistance highlighted above.
Moving Average (MA)
Based on the daily chart, the EMA20 has crossed the SMA50/SMA200 and turned down. This market movement has resulted in a short-term sell trend. Nevertheless, to create a safe trading method, it is advisable to wait for an extra sell signal from the SMA50 moving average.
The 4-hour chart shows that the EMA20 has crossed the SMA50 which translates to a bearish reversal signal. Both the SMA50 and EMA20 moving averages crossed the SMA200 and continued with their downtrend.
Looking at the 1-hour chart shows that the EMA20 has crossed the SMA50 and gone down to cut the SMA200, which also went down.
In the scenario of a bear market, there are many signals of a downtrend on 1-hour chart, set up a sell strategy, focus on price action to make the right decisions.
The EMA20 is represented by the blue line on these charts.
The SMA50 is represented by the black line on these charts.
The SMA200 is represented by the red line on these charts.
