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Gold Technical Analysis - Gold Trading: 2018-09-03
Global risks support gold prices in euros
Gold prices fell in August for the 5th consecutive month, for the first time since 2013. Is there a possibility for gold prices to correct up and will the XAUEUR rise?
The US dollar may be in demand amid the Fed's plans to raise the rate at the next meeting on September 26. Before the end of the current year, the US regulator can do this twice. In turn, another budget crisis is planned in the. This time - in Italy, where the government deficit has already reached 3% of the GDP of the entire European Union. This weakens the euro. Additional negative factors for the single currency may be the plans to raise import duties on European cars in the US. In turn, the demand for gold is still preserved despite the strengthening of the US dollar. The strengthening of global risks amid increasing US import duties on Chinese goods worth $200 billion a year, scheduled for the end of this week, also contributes to this.
On the daily timeframe, XAUEUR: D1 approached the upper boundary of the falling channel. It must be overcome before opening a buy position. A number of technical analysis indicators formed buy signals. The further price increase is possible in case of the strengthening of such global risks as the budget crisis in Italy and the trade war between China and the US.
- The Parabolic indicator gives a bearish signal. Before opening a buy position, it makes sense to wait for a growth signal.
- The Bollinger bands have widened, which indicates high volatility.
- The RSI indicator is below 50. It has formed a positive divergence.
- The MACD indicator gives a bullish signal.
The bullish momentum may develop in case XAUEUR exceeds the two last fractal highs and the resistance line of the downtrend at 1045. This level may serve as an entry point. The initial stop loss may be placed below the two last fractal lows and the low since 2016 at 1021. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level (1021) without reaching the order (1045), we recommend to close the position: the market sustains internal changes that were not taken into account.
Summary of technical analysis
| Position | Buy |
| Buy stop | Above 1045 |
| Stop loss | Below 1021 |
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