Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Correction Expected In Gold

Published 10/18/2016, 09:35 AM
Updated 07/09/2023, 06:31 AM

On the 3rd October, gold exhibited the break-out under the 1310 that I had long awaited, and initiated a very strong downward movement with a great deal of momentum. This downward movement has met its end for the time being in the support area around 1250. The region around the 1250 was a fiercely contested spot for many months, which is why a retracement is now very likely. From the perspective of the chart, a setback in the region of the 50% retracement can now be assumed. The area with the last significant lows on the daily chart at 1305 would also be possible, and would not really change much in the short-term bearish scenario.


This would make the price target of the correction the price area of 1295 to 1305.

Gold Daily Chart

The COT data is now also speaking in favor of a small recovery in the gold price. As expected, the funds and hedge funds broke down a large part of their short positions during the sell-off in gold at the beginning of October. Similarly, the commercials also dismantled a good portion of their long positions. With this, for now, we are moving away from the extreme values in the commercial index that have provided us with the clear short setup over the last few weeks.Gold Weekly Chart with COT Index

The monthly chart continues to run within a clean downwards trend channel, even after the triple-wave upward correction of several months. Until gold sustainably goes above the last high at 1390 and breaks out of the channel, therefore, the downward trend will remain intact. Thus the long-term targets are once again in the area of 1100 dollars.Gold Monthly Chart

Short-term long trades can be built up until the target area of the correction around at 1300 dollars. After that – or if the correction fails clearly in smaller price zones already – then in terms of the chart, short positions are more advisable for longer swing trades. However, one should also keep a close eye on the positioning of the commercials and the large specs in the coming weeks. If these positions take on extreme values once more, then there will be much clearer signals again!
Until then, I wish you successful trades.

IMPORTANT NOTE:
Exchange transactions are associated with significant risks. Those who trade on the financial and commodity markets must familiarize themselves with these risks. Possible analyses, techniques and methods presented here are not an invitation to trade on the financial and commodity markets. They serve only for illustration, further education, and information purposes, and do not constitute investment advice or personal recommendations in any way. They are intended only to facilitate the customer’s investment decision, and do not replace the advice of an investor or specific investment advice. The customer trades completely at his or her own risk.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.