Spot Gold, bullish as volatility shakes the equity & bond market
Trade set up - We have gold on ‘high watch’ and really waiting for a price to give us a higher probability set-up.
There is a confluence of resistance levels seen on anytime frame above the 4-hour. We are most interested in the 2017 double top neckline, 38.2% fibo of 2018 sell-off and recent daily high between 1238/40. Let price push the trade, so, a closing break (on the daily chart) above 1240 would potentially discard our range pattern and see price move into the next key resistance level of 1260, which is also the 50% retracement of the last major high.
Why we like this trade – The recent rise volatility in the S&P 500, with the VIX index above 20%, has seen managed money part cover a record short positions in gold, which we believe indicates a change of trend and a buying opportunity in the commodity longer term. That said, the strong rally overnight in the S&P 500 and Nasdaq 100 off the lows needs monitoring. A higher high in either indices should see implied vols fall and gold head lower off this key resistance area. Hence, we tactical wait for a daily close above 1240.
A pullback in gold off this confluence of resistance levels, followed by a crossover and drop in momentum oscillators would see us conversely look at short positions, but only when price traded through 1215.
So, a bit of work needed at current levels but the battle line are drawn.
Disclaimer.
Trading leveraged products carries a high level of risk and may result in you losing substantially more than your initial investment. Pepperstone Group Limited is licensed and regulated by the Australian Securities and Investments Commission (AFSL 414530). Pepperstone Limited is authorised and regulated by the United Kingdom Financial Conduct Authority (FRN 684312). This information not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation
There is a confluence of resistance levels seen on anytime frame above the 4-hour. We are most interested in the 2017 double top neckline, 38.2% fibo of 2018 sell-off and recent daily high between 1238/40. Let price push the trade, so, a closing break (on the daily chart) above 1240 would potentially discard our range pattern and see price move into the next key resistance level of 1260, which is also the 50% retracement of the last major high.
Why we like this trade – The recent rise volatility in the S&P 500, with the VIX index above 20%, has seen managed money part cover a record short positions in gold, which we believe indicates a change of trend and a buying opportunity in the commodity longer term. That said, the strong rally overnight in the S&P 500 and Nasdaq 100 off the lows needs monitoring. A higher high in either indices should see implied vols fall and gold head lower off this key resistance area. Hence, we tactical wait for a daily close above 1240.
A pullback in gold off this confluence of resistance levels, followed by a crossover and drop in momentum oscillators would see us conversely look at short positions, but only when price traded through 1215.
So, a bit of work needed at current levels but the battle line are drawn.
Disclaimer.
Trading leveraged products carries a high level of risk and may result in you losing substantially more than your initial investment. Pepperstone Group Limited is licensed and regulated by the Australian Securities and Investments Commission (AFSL 414530). Pepperstone Limited is authorised and regulated by the United Kingdom Financial Conduct Authority (FRN 684312). This information not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation
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