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Charts of the Week - SMAs about to cross, Is Gold set for a Rally?

XAU/USD – SMAs about to cross, Is Gold set for a Rally?

Charts of the Week - Technical Analysis

XAU/USD – SMAs about to cross, Is Gold set for a Rally?

  • Resistance Zone: $1870 to $1890
  • Key Resistance: $1850
  • Major Pivot Point: $1808
  • Key Support Level: $1790
  • Support Zone: $1760 to $1750
  • 200 Day SMA – Green Line
  • 50 Day SMA – Red Line
  • CBOE VIX – Volatility Index @ 28.366 +1.41 (+5.23%)

Trade Insights

XAU/USD – Chart shows Viable long positions above the Pivot at $1808 with the first target of Key Resistance Level @ $1850 and after consolidation towards the Resistance Zone at $1920 to $1940.

Alternatively, Short positions below the Pivot at $1808 if the pair drops out of the ascending parallel channel with the target of the Key support level at $1820. And then to head towards the Support Zone between $1790 to $1770.

XAU/USD Chart Analysis:  Directional bias - 2 Weeks 

XAU/USD chart shows that the gold prices are gradually dragging downwards towards the Pivot at $1808. The pair is already trading at our previous pivot point at $1820. And it could be that gold might find support here. If not, then $1808 is the Pivot where in the past Gold found support twice before jumping above $1850 in both instances. So, there could be a gain to make of about $40 on the gold trade. 

If the prices managed to drop below the Pivot at $1808 to $1800 threshold then gold could further test the $1786 support just below the Key support level at $1790. This trough is the yearly low that was marked in May. The Symmetrical triangle that is drawn on the chart indicates the prices could drop downward. However, the SMA cross is just around the corner and that indicates the prices could jump and deliver a strong rally in the next couple of weeks.

The pair is still trading below 50 Day SMA and 200 Day SMA lines the SMAs are about to cross indicating there could be a rally and change of direction awaiting just around the corner. The Stochastic Oscillator has currently dropped below the -50 points and is still heading downwards. As the pair is trying to find support to bounce back up. The 14-Day RSI indicator is hovering below the midline indicating the Bears could continue to control the prices.    

Fundamental Overview

The strong dollar currently hovering just at 104.53 has been pressurizing the yellow metal as investors are becoming more risk-averse as markets changed the direction yet again to continue their journey downward. There could be higher volatility in the gold prices today as Jerome Powell the Chairman of the Federal Reserve is due to give a speech on the likely monetary policy action in July. There is a positive shift in the risk sentiments, and this could continue to help gold prices.

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The information provided is of a general nature and is not intended to be personalised financial advice. The information provided is not intended to be a substitute for professional advice. You may seek appropriate personalised financial advice from a qualified professional to suit your individual circumstances.

Trading in Rockfort Markets derivative products may not be suitable for everyone as derivative products may be considered as high risk. Please ensure that you understand the risks involved. A Product Disclosure Statement can be obtained here and should be considered before trading with us.

Vishal, R.

June 30, 2022

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