Overview:- Yellow metal is showing whipsaws on both side initially it declined from 1703.19 level and marked a low of 1451 on last week two times but this week it rebound sharply and we have seen rally till $1640. which was very aggressive rally for buyers and long holders made tremendous profit from this move but it could not sustain at that level and given closing at $16248 level which indicates that the rally was not for buyers it was for sellers to short the gold on high levels.
Today at the time of writing gold is trading and surviving near to $1600 level and below $1570 level we may announce that gold is clearly trading in the downtrend and go for short on every rise. A valid downside breakout of $1570 level open the way towards the $1520, $1450 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 1550 for target of $1500 and $1470 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 from intraday point of view and $1700 level from positional point of view the next arrival of gold is $1350 level and $1300 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 fourth consecutive session, this time by nearly 5K 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 $1,630 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.
Gold 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 and Lock down in many countries may take the gold to downside.
Technical Analysis: – From technical prospective a tripple 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 $1620 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 $1650 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 above minor and major EMA lines but all the moving average lines apex to $1570 level, which is providing strength to the bears. The $1550 level can be considered as key support level followed by $1500 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 $1550, 1500 and $1450 level with strict stop loss of $1640 level on closing basis.
