Gold’s weekly outlook: Dec 14-18Gold did move in the anticipated range as it touched the highs of $1875 but failed to close above the resistance zone of $1850-$1870s. This move was largely on expected lines as the only resistance for the price post hitting the channel low was the bitter zone of $1850-$1870s which undoubtedly got respected on the first try to break higher though it may not be long when the price moves back above this zone which then would simplify the trend even more as nothing, literally nothing has changed fundamentally with the pandemic still raging on with enough evidence to suggest the situations across the globe continue to deteriorate as death toll remains on the rise with fresh cases continuing to overwhelm medical facilities. As most of the countries are now busy campaigning vaccines to its citizens some free and some at a cost, this doesn’t mean the virus is tackled and the normalcy will be attained sooner than expected, it may so also happen that many people might avoid the vaccine altogether as its efficacy and suitability has triggered lots of doubts already with an example being the allergic reaction people having post getting vaccinated. Honestly, the situation is not looking healthy at all as the dependency on vaccine for getting back to pre-covid life is for now still a vision unless something more impactful way gets stitched, the history suggests that the virus would itself get weaker and weaker until it no longer remains such a cause of concern and till this day uncertainty over full normalcy would keep on looming which should keep the demand for the yellow metal high. To watch next week – Stimulus deadlock, Fed meeting, Brexit and other important economic data.
On the chart –
Gold climbed higher towards its resistance and did fail to overcome it as it was pushed lower near the end of the week making a nasty weekly candle which if not negated would be another test for bulls to keep the supports live. Though the weekly candle looks unhealthy, the reason for optimism remains a possible formation of cup and handle in daily timeframe and if it gets completed the resistance zone of $1850-$1870 might be crossed in this year itself and so can $1920s. We have 2 scenarios –
1. Gold closed above the support, till this is held it can go to $1857. If this is crossed it can move towards $1875. And if this is taken out it can rally to $1886.
2. Bears might get another window of opportunity if the candle negativity holds and if that happens it might not be such big a range to consider as positional with scalp trades suiting the best.
Bullish view – Bulls eased towards the high of the resistance zone of $1850-$1870s but failed to capitalize resulting in a candle formation which puts them in pressure once again. Again, bulls might not have conceded the retest as a better opening would scrap all the negativity plus another pattern in formation could help them possibly shoot back over the $1900s which remains the path the price is following as it is moving in a channel. For bulls it is crucial to break the ongoing channel/range whose top happens to be in between $1912-$1920 which was also the previous high so the impact of such a break would be pretty strong.
Bearishness again remains uncertain as there is a hope from a negative candle formation but overall it still is distant until the channel breaks on the downside which is a very unlikely scenario.
On larger terms, gold continues to remain bullish and prices are expected to head higher.
Possible trades are on both sides but mainly on upside, gold can be bought above $1846 for the targets of $1857 and $1875 with a stop loss placed below $1836. Longer term target $1886.
Dips towards support (and breakout region) can be used to create longs for the above mentioned targets.
Shorts can be useful for scalp trades only.
