A lot of traders are in limbo at the moment wondering where Gold is going next after the decline we’ve witnessed recently. The honest answer to this is we’re in a region at present where we should have seen a technical retracement on price at least up to 1850, however, what they’ve decided to do instead is hold the price in this area and range it over this week giving us a high so far of 1835. We have a lot going on in the news as well as options expiry, so this is potentially the reason the powers that be are holding the price and accumulating orders here. We’re going to share the long-term charts that we have shared in the past with an overall view of Gold and what the possibilities are based on its structure and key levels.
We shared this chart a few months back, please see the link below. We showed what we were anticipating which was just before the Russian invasion of Ukraine. As you can see what we were looking at was the higher liquidity region to reject the price and then start the decline. What we usually see with high volume regions is the price either rejects the move or, the area is used to propel the price in continuation of the move. This is exactly what happened here! Having said that, once the high was created, we can now see we’ve had a succession of bearish candles and a reversal pattern on this chart temporarily changing the structure. This makes this week’s candle close very important as we need it for confirmation! We had highlighted back in February the 1720 target if that liquidity region rejected price which you can see on the chart. On this chart we can see the key area here is 1780, the price needs to break this level to the downside which will suggest bulls have stepped aside temporarily and they wait to get better pricing to buy in on Gold.
If you zoom out of this chart and go back to 2011/12 we had illustrated the Fractal we were looking at throughout the bull run and before the Russia/Ukraine crisis which as you can now see is in play again! Now, because this is a long-term chart the key levels are stretched further apart so we already know the immediate support on this chart is 1780, which needs to break to the downside for this to go further. We now need to look to the upside and gauge what the resistance level is and where we need to break for this to then change structure and continue to the upside. So, our first point of reference is the trend line, which as traders are aware are subjective, traders draw them differently and most are in different places. We have our own way of drawing them so we will stick with this one for now. The trendline resistance area is also conflicting with the 1830-35 price region illustrated as liquidity which we have also been talking about on the KOG reports over the last couple of weeks. Again, because this is a long-term chart, we have to stretch out these levels marginally, which if we do in this scenario would give us the 1845-50 region give or take. This now makes this range of 1780-1850 possibly one huge range of liquidity and accumulation for the markets.
So in summary, on the weekly chart we either need to break and hold above 1850 and then 1872 for this to continue to the upside, or, we need to break and close below that 1780 region for this to confirm going lower. As it stands, if this was a daily chart we would be saying level to level, however, on this chart we would say for the swing wait for the high or the low.
As always, trade safe.