Overview:- By analyzing the daily chart we can see that yellow metal was not moving anywhere from last couple of days but yesterday we have seen bears got the supply pressure and low demand from retailers due to lock down in most of the countries. Yesterday it started journey from 1626 to and marked a low of 1573 and given closing at almost same levels. Well this was the first indication of bears and further indicating we will get if gold trades below $1570 on hourly basis then we may announce that it has topped out and it will fall further to $1540 and $1500 level coming trading sessions.
Today at the time of writing gold is trading and surviving below $1590 level. The way bears are reacting it seems like we are going to watch a valid downside breakout of $1570 level which will open the way towards the $1540, $1500 level once again. There is too much weakness in the yellow metal. Yellow metal has lost its status of safe heaven investment.
In our previous report also mentioned to go for sell around 1600 for target of $1550 and $1520 level with strict stop loss of $1640 level, and our both targets have been achieved smoothly, so we are expecting that our readers must have made profit from this move.
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 $1350 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 $1640 . The next arrival of gold is $1500 level and $1450 level in next weeks. The short term trend is down so in a downtrend market sell on high will be profitable strategy.
Fundamental Analysis:- Gold futures markets noted open interest shrunk for the seventh consecutive session, this time by nearly 10K contracts. On the opposite direction, volume reversed two drops in a row and increased by almost 92.5K contracts. Prices of the ounce troy of the precious metal met support in the $1,570 region so far, where is also located the 21-day SMA. Tuesday’s decline was on the back of another increase in open interest, removing impetus for a upper retracement and instead favoring a near-term downfall.
Gold failed to capitalize on the early uptick and witnessed a modest intraday pullback today followed by a a steep downfall yesterday, 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 and Lock down in many countries may take the gold to downside.
Technical Analysis: – A pentagon formation on the gold which occurs rarely on the charts and we got this pattern on the daily chart which pushes us to short the gold for bigger targets. It suggest us that gold will fall from here around $300- $400, now question is that will it get true or not ?
The current sentiments in the global market suggest us that everything is possible due to Cronovirus.From technical prospective a triple top pattern has been posted on the daily chart which indicates to sell the gold and gold received supply pressure already as it is unable to survive above $1600 levels, which is a negative sign itself. The short term uptrend line has been breached out which indicates that go for short the gold and it will fall further.
Odds are in favor of bears and daily to weekly bias remains bearish on gold as long as $1640 level remains intact on closing basis. A bearish divergence on the RSI has advised to sell already and now MACD crossover is flashing the sell signal with a bearish crossover. RSI also turned down below 50 level which is providing us sell signal.
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 $1640 level will change the outlook from bearish to bullish.
What next:- Yellow metal is trading and sustaining below minor and major EMA lines but all the moving average lines apex to $1570 level, which is providing strength to the bears. The $1500 level can be considered as key support level followed by $1450 where $1640 is a key resistance level followed by $1700 level.
Trade idea:- Based on the chart and study above we would suggest that traders may go for sell around 1600 for target of $1520, 1450 and $1400 level with strict stop loss of $1640 level on closing basis.
