GOLD: The Bigger Picture Shows Bulls Are Preparing To Rally
As we are edging closer to the end of October the main focus today will be how Gold is looking from a top-down technical perspective.
Monthly Timeframe: As we can see on the chart Gold has seen a sharp decline in value since April, however, the 2008 trendline is being well respected and looks to be the area for at least a medium term reversal. Septembers candlestick closure printed a spinning top indicating indecision and a deceleration of bearish momentum. October is looking likely to close a very strong bullish engulfing candle, engulfing 2 previous months price action.
Weekly Timeframe: Zooming into the weekly timeframe we can see with a lot more clarity on how the price is behaving at our long-term trendline. There are three or four candles with Doji/Spinning top characteristics, again showing bears have run out of steam with no momentum to smash through such a strong level of support! This price action is followed by a strong push to the upside now trading above both moving averages awaiting the cross. Last weeks price did see Gold continue to gain value, however, price whipped back from the highs of 1243 to close around 1233 suggesting we could be in for a pullback in the short term.
Daily Timeframe: The daily gives us more confirmation that a pullback may be on the cards before moving higher. Monday morning saw price trading around the 1230.00 level of support. If we do see a break of this level it is likely to fall to our strong support floor of 1215.00.
The higher Timeframes analysed above show the bigger picture of where a currency or commodity is heading next. My overall bias for Gold is most definitely bullish primarily due to how price has respected the 2008 trendline and is appearing to reverse to the upside. This does not, however, mean that the precious metal does not face some significant hurdles ahead of its most recent bull run. One of those hurdles is the looming rise of US interest rates, coupled with policy rates across other reserve currencies remaining low which will continue to weigh on investor interest in Gold.
To conclude, I can visualise a pullback to 1215.00 happening this week before my initial long target of 1245.00-1250.00 being achieved....