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Bearish Perspective On Gold? That Depends On Your Timeframe

By Anna CoullingCommoditiesDec 10, 2019 02:18AM ET
www.investing.com/analysis/bearish-perspecitve-on-gold-that-depends-on-your-timeframe-200491364
Bearish Perspective On Gold? That Depends On Your Timeframe
By Anna Coulling   |  Dec 10, 2019 02:18AM ET
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Gold Daily Chart
Gold Daily Chart

Your view on gold last week would depend on your perspective. As a gold bug or investor, it was a bad pespective, something that doesn't bode well for the medium-term. But as an intraday gold trader, it was an excellent vantage point, one that was an inverse of the price action for U.S. indices. Whilst they fell and the rose, signalling bullish momentum, gold rose then fell, closing the week back near the open.

This was denoted on the daily chart by a wide spread up candle on Tuesday, followed by a wide spread down candle on Friday. That occurred on good volume, confirming the fragile nature of the technical picture for gold with the move lower largely driven by a flow out of safe havens following the Nonfarm Payrolls data.

The issue now is where and when gold is likely to find some solid technical support. At present, on the daily chart, this appears to be waiting in the $1452 per ounce region. Here we have a cluster of two levels denoted with the blue and red dashed lines. Whilst individually not strong, as a cluster their strength increases.

These levels are delivered automatically by the accumulation and distribution indicator – the thicker the line the greater the strength of each level. In addition, and to add further to the bearish picture, the volume point of control is adding more downward pressure from the $1512 per ounce area. And with light volume now below on the VPOC histogram to the right of the chart, gold is likely to move through here relatively unopposed.

Gold Weekly Chart
Gold Weekly Chart

Moving to the weekly chart, this perhaps makes the point more clearly, with last week’s price action and the associated volume portraying this weakness. On this timeframe, the next significant level of strong support is well below, in the $1420 per ounce area and denoted with the blue dashed line. This is followed by a low volume node on the VPOC histogram down to $1400 per ounce and below. Not an encouraging sign for gold bugs and investors, and confirmed with the trend monitor indicator which is now in transition from bullish to bearish, with the yellow trend line also falling. Any change to bright red on this time horizon will be bad news indeed.

Bearish Perspective On Gold? That Depends On Your Timeframe
 

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Bearish Perspective On Gold? That Depends On Your Timeframe

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