XAUUSD Intra-Day Analysis 8/5/2020
Updated
As expected, Gold continued to climb after rebounding off the Demand Zone. Price tested the upper 4H SR Zone (coincides with upper boundary of Bull Pennant) and broke out with decent volume supporting the climb. As of the time of writing (0200 Singapore Time), a small Doji has gapped up on the 4H chart with low volume.
Given that the Demand Zone has been tested twice and the third low has not managed to breach the Zone, it is highly unlikely to return to those levels again, barring major unexpected economic news. Depending on strength of movement right after my analysis, price may return to the lower 4H SR Zone and rebound off the lower boundary of the Bull Pennant before climbing past the upper 4H SR Zone again. If price manages to reach the top Daily SR Zone (around 1733.5), monitor buying and selling volume, as the area has experienced multiple price rejections. I expect there to be a retesting of the upper 4H SR Zone as a Resistance turned Support, as a final retracement before price gathers enough momentum to break out of the Daily SR Zone. I have confidence that Gold will continue to climb towards 1800 levels.
Bullish in the short and mid term (Scalps and Swings). I might be overly optimistic on this one, but there's no reason to fight the trend. Swing traders should look for good entries on the lower time frames (M30, M15) to ride the Bull Rally. Scalpers can look for opportunities closer to the key SR Zones mentioned above, especially the Daily SR Zone where an initial rejection can be expected. As mentioned earlier, watch out for volume and price action as price approaches the Zone. Set your TP levels around the upper 4H SR Zone and keep your stop loss tight.
Given that the Demand Zone has been tested twice and the third low has not managed to breach the Zone, it is highly unlikely to return to those levels again, barring major unexpected economic news. Depending on strength of movement right after my analysis, price may return to the lower 4H SR Zone and rebound off the lower boundary of the Bull Pennant before climbing past the upper 4H SR Zone again. If price manages to reach the top Daily SR Zone (around 1733.5), monitor buying and selling volume, as the area has experienced multiple price rejections. I expect there to be a retesting of the upper 4H SR Zone as a Resistance turned Support, as a final retracement before price gathers enough momentum to break out of the Daily SR Zone. I have confidence that Gold will continue to climb towards 1800 levels.
Bullish in the short and mid term (Scalps and Swings). I might be overly optimistic on this one, but there's no reason to fight the trend. Swing traders should look for good entries on the lower time frames (M30, M15) to ride the Bull Rally. Scalpers can look for opportunities closer to the key SR Zones mentioned above, especially the Daily SR Zone where an initial rejection can be expected. As mentioned earlier, watch out for volume and price action as price approaches the Zone. Set your TP levels around the upper 4H SR Zone and keep your stop loss tight.
Note
Just as I finished my analysis, buying volume surged and the wicks on the gapped candle has been filled. While nothing is ever certain, I believe price should not be looking to retest the lower SR Zone anymore. Wait for the climb towards the Daily SR level and watch price action closely.Note
The candle that formed on the 4H chart right after my analysis experienced a larger surge of selling volume that surpassed that of the previous breakout candle, but failed to push down price, resulting in a doji formed. It was then followed by a hammer that retested the higher 4H SR Zone, and a small Bullish Engulfing candle formed after, with its long upper wick filled by the following candle. While volume is low, price is steadily moving upwards as expected.Note
As per the secondary expectation, price yet again retested the lower SR Zone and rebounded off the lower boundary of the pennant. I still expect an eventual upward breakout, but right now markets are choppy and scalping is risky. Enter at your own risk and as always, keep your stop losses tight.
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