Gold testing major support level, cautious bull wait
The price of gold has finally found some support after it hit the major support level at 1285.85. The bears took control of the market after the price hit the major resistance level at 1365.05. Most of the aggressive price action trader made a decent profit by shorting gold after the formation of the triple top pattern in the daily chart. Currently, the long traders are cautiously waiting for the bullish price action confirmation signal to execute fresh long. If the bulls manage to take control of the market from this level, we might see another bullish run. On the contrary, a clear break of the current support level will result in a sharp drop.
GOLD daily chart analysis
Figure: Gold testing major support level in the daily chart
From the above figure, you can clearly see the buyers are trying to take control of the market after the price hit 61.8% retracement level. If the bulls manage to establish is control, the pair will eventually lead towards the next major resistance level at 1306.21. This level is going to provide an extreme level of selling pressure to this pair since it’s backed by the 200 days SMA.A daily closing of the price above the 200 days SMA will ultimately lead this pair towards the 100 days SMA. This level is very crucial for the long-term investors since a clear break of this level will confirm the end of bearish retracement.
On the downside, we need to break below the 1285.85 level to see fresh selling pressure. A daily closing of the price below that level will ultimately lead this pair towards the major support level at 1237.04. This level is the long-term support level and the sellers will have to work very hard to clear the low of 11th December 2017.
GOLD weekly chart analysis
Figure: Gold testing weekly horizontal support level
In the weekly chart, you can clearly see the price of gold is currently testing a major support level. Though we had an initial bullish bounce the sellers might again come back to lead this pair towards the 100 weekly SMA. This level is very crucial since any bullish price action confirmation signal near the 100 weekly SMA will be an excellent opportunity to execute long orders. However, a clear break of the 100 weekly SMA will ultimately lead this pair towards the 200 weekly SMA.
Fundamentally the U.S dollar is trading mixed against most of its major rivals. Majority of the leading investors are cautiously waiting for the next FOMC meeting minute to get a clear clue regarding FED rate hike policy. In order to retain the bullish tone, the U.S economy must exhibit outstanding performance in the upcoming week. A sluggish data release in the U.S economy will help the Gold bulls to rally higher. Considering the technical and fundamental parameters, buying the gold with bullish price action confirmation signal seems logical at the current market conditions.