Overview:- From past couple of days we are witnessing that gold is trading in very narrow range where only both bulls and bears are trying their best to take at their own side but recently from morning session itself we are witnessing a bullish counter attack from bull’s side. Well bulls are putting their full efforts to change the picture but it’s not going to be easy as it is trading in very narrow range of $1560 to $1580. So breakout on either side will give us new buy or sell signal. However, the chances are very high that we may see a bullish side attempt.
Today at the time of writing, yellow metal has made a low of $1564.26 and from there onwards it moved up towards north side. Well the way bulls are doing it seems like they are approaching the $1590 and $1600 level. In our previous report also we mentioned to buy at $1550 level for target of $1565 and $1575 level with strict stop loss of $1540 level and our both targets have been achieved.
Fundamental Analysis:- The recent decline in open interest and volume coupled with lower prices opens the door to a potential bounce in the short-term horizon. Against this backdrop, the ounce troy of the precious metal is still seen capped by monthly peaks near $1,570 (February 1st). Gold is finding love in Asia amid signs of risk aversion in the equity and currency markets. At press time, the yellow metal is trading at $1,570 per Oz, representing a 0.30% gain on the day. The futures on the S&P 500 are currently down 0.30%.
What’s particularly noteworthy is that both gold and US dollar are reported a weekly gain. The dollar index, which tracks the value of the greenback, has ended higher for the third straight week. Investors usually pull out money from the gold market during bouts of dollar strength. This time, however, gold has turned a blind eye toward the rise in the greenback. The price action is indicative of the underlying bullish sentiment in the gold market.
Technical Analysis: – From technical prospective we can see that a bullish flag pattern has been posted on the daily chart which has been completed. Short term to intermediate term trend is up so in an uptrend market buy on dips will be profitable strategy and the way bulls are reacting it seems like we got the perfect trend to initiate the long position. Overall gold is trading above all the major and minor EMA lines, which is providing us bullish signal, however we will get further bullish signal above $1580 level.
Odds are in favor of bulls and daily to weekly bias remains bullish on gold as long as $1560 level remains intact. A bullish crossover on the MACD indicator is a recent development and RSI is turned upside above 50 level, so we may see some correction but this correction should be taken as buying opportunity.
The bulls are dominating the bears and leading in the game. Bulls are playing at front foot and it seems like bulls are going to continue with this game and will not provide any chance to bears. On contrary a daily closing below $1560 level will change the outlook from bullish to bearish.
What next:- Yellow metal is trading and sustaining above minor and major EMA lines which is providing strength to the bulls. The $1560 level can be considered as key support level followed by $1550 where $1585 is a key resistance level followed by $1590 level.
Trade idea:- Based on the chart and study above we would suggest that traders may go for buy around 1574-75 for target of $1590 and $1600 level with strict stop loss of $1560 level, every dip should be convert as buying opportunity
