Synopsis: In the past week, Gold (XAUUSD) has continued its downward movement, forming a sequence of three consecutive bearish candles. The question arises whether this trend will reverse or if the price will fill the gap around the 1860-1870 levels. This analysis explores potential trading positions for the upcoming week, utilizing charts, indicators, and critical support and resistance levels.
The recent bearish trend in gold has prompted speculation about potential reversals and price gaps. This analysis aims to provide insights into the likely movements of gold for the week of 21-25 August 2023. By examining daily, weekly, and monthly charts and considering key indicators, this analysis will outline possible entry and exit points for traders.
Daily Chart Analysis: Gold's (XAUUSD) daily chart reveals its recent bearish channel, aligning candle highs and lows. Notably, the last candle failed to exhibit significant downward momentum and struggled to break previous lows or highs. The bearish movement has been limited between 1920 and 1885 levels, implying diminishing bearishness. However, the breach of critical support at 1920 raises concerns. There's a gap around 1870 levels and a potential attempt to fill this gap might occur, although further downward movement is possible.
Weekly Chart Insights: The weekly chart depicts gold trading within a channel, oscillating between the bottom and top. A pullback towards the channel's bottom is plausible. The 1850-1860 levels, including the 100-week average, present strong support. Breaking below these levels might lead to increased bearishness. Resistance is seen at 1900, 1920, and 1940 levels. If gold surpasses these resistances, a reversal could be anticipated.
Indicators Analysis: Moving averages indicate a convergence towards support levels, signifying a potential pullback. Stochastic indicators suggest the possibility of oversold conditions, which historically lead to pullbacks. MACD indicators highlight potential bearish crossovers, raising caution about further downward movement. A convergence of indicators and the oversold status indicates that even if gold fills the gap early in the week, a pullback towards the end of the week is probable.
Trading Strategy: Considering the above analysis, potential trading strategies are as follows:
Buying Strategy:
Buy around 1896 levels.
Expect resistance at 1904, 1910, and 1920.
Be cautious as 1920-1940 levels present strong resistance.
Selling Strategy:
Sell if gold falls below 1884.
Expect support at 1878 and 1870.
Critical support lies at 1860.
Be watchful of 1836 and 1820 levels.
Conclusion: Gold's(XAUUSD) recent bearish movement suggests potential support at 1870, which could lead to a bounce-back. Critical support at 1860 and 1836 is significant. Resistance at 1920-1940 levels is crucial for potential reversal. Although oversold conditions and convergence indicators hint at pullbacks, the unpredictability of markets must be considered. Careful trading with appropriate stop-loss and risk management strategies is advised. Remember, the market can surprise even the most cautious traders.
Disclaimer: The information provided is solely for educational purposes and does not constitute financial advice. Trading involves risks, and decisions should be made based on thorough research and understanding. The author does not take responsibility for any trading losses incurred.
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