Cabana Capitals Blog Forex Broker Gold: Double top pattern on daily chart suggest to sell it.

Gold: Double top pattern on daily chart suggest to sell it.

Gold: Double top pattern on daily chart suggest to sell it. post thumbnail image

Overview:-  The both side whipsaws in the gold is the nature of yellow metal where trades are making both side profit and betting on it with full of conviction. Initially we advised to buy the gold around $1570 to $1690 and then we advised to short the gold around $1690 to $1640 level for aggressive traders and our readers made profit in both the recommendations. Well the question is what next, where gold is heading now ?

The price action on the daily technical chart suggest us that it’s just a starting of free fall gold will fall further and will arrive at $1500 level in near term. But right now the situation is where to enter in the gold and where to exit from intraday to weekly point of view.

Well our readers are advised to sit in the sell side with tight stop loss of $1685 from intraday point of view and $1705 level from positional point of view the next arrival of gold is $1600 level and $1570 level in today or tomorrow. The short term trend is down now and it’s further clear picture will be below $1570 level and intermediate term trend is clearly bullish so the positional bias change once we see a daily closing below $1570 level in gold.

Fundamental Analysis:-   Gold futures markets noted open interest shrunk for the fourth consecutive session on Wednesday, this time by nearly 3K contracts. On the opposite direction, volume reversed two drops in a row and increased by almost 62.5K contracts. Prices of the ounce troy of the precious metal met support in the $1,630 region so far, where is also located the 21-day SMA. Wednesday’s decline was on the back of another drop in open interest, removing impetus for a deeper retracement and instead favoring a near-term recovery.

Yellow metal failed to capitalize on the early uptick and witnessed a modest intraday pullback, albeit has managed to hold above one-week lows set early this Thursday Another brutal selloff across the global equity markets – amid growing fears over the corona virus outbreak – provided some early boost to the precious metal’s perceived safe-haven status. The market rout followed a move by the World Health Organization to declare COVID-19 a pandemic and the US President Donald Trump’s announcement to suspend all travel from Europe for 30 days.


Technical Analysis: – From technical prospective a double top pattern has been posted on the daily chart which indicates to sell the gold and gold received supply pressure at an initial phase but we will get further confirmation with a hourly closing below $1620 level. The short term uptrend line has been breached out which indicates that go for short the gold and it will fall further with a strict stop loss of $1685 level and $1705 level.


Odds are in favor of bears and daily to weekly bias remains bearish on gold as long as $1670 level remains intact.  A bearish divergence on the RSI has advised to sell already and now MACD crossover are flashing the sell signal with a bearish crossovers. RSI is about to turn below 50 level which will confirm the downtrend for short term.

The bears are dominating the bulls and leading in the game.  Bears are playing at front foot and it seems like bears are going to continue with this game and will not provide any chance to bulls. On contrary a daily closing above $1670 level will change the outlook from bullish to bearish.

What next:-  Yellow metal is trading and sustaining below minor and major EMA lines which is providing strength to the bears. The $1600 level can be considered as key support level followed by $1570 where $1670 is a key resistance level followed by $1705 level.

Trade idea:- Based on the chart and study above we would suggest that traders may go for sell around 1650 for target of $1600  and $1560 level with strict stop loss of $1690 level

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