Gold recently found strong resistance at $1750 from where it continued lower impulsively. Gold breaking below $1700 again did rise a question – is this the end of the bullish gold trend? Can Gold recover higher and reach $1800? Let’s check the Gold’s Technical Analysis to find more levels and insights.
May 1, 2020, | AtoZ Markets – Gold has been quite non-volatile and impulsive with the recent bullish trend. After the price bounced higher from $1450 during mid-March, there was never looking back. Though the price had certain pullbacks along the way but could not violate any dynamic supports.
Despite the recent dip, in April, Gold managed to gain more than 6%, which resulted in a consistent second month of gain. After 5 days of consistent losses, $1700 support area was broken which has already shooked the investors a bit, but there is still hope for further up move. As COVID-19 impact on the United States and major countries in the world continues, Gold has a greater probability to remain as a safe-haven asset in the coming days.
Covid19 Bullish Gold Trend
Investors’ favorite #commodity, Gold, has been in a consistent bullish trend as Coronavirus epidemic started to impact the global economy. The stock market, forex market, and crypto market have lost significant value around this COVID-19 situation. Though Bitcoin is currently regaining certain momentum but could not match the optimism of Gold investors in the process.
image: Gold H4 chart
According to the 4-hour chart, if we observe closely, the Bullish wave reaching $1750 was a bit diagonal and not quite impulsive as the first leg. The price did manage to sustain higher, but it was communicating the weakness built around the upward price action. The price did break below $1700, but another strong support at $1650 may still hold the price higher. Moreover, the dynamic level 200 EMA is set to add confluence to the further up move in the coming days.
As per Fibonacci Expansion, the price pushed lower after it reached 100 level and converged with the MACD lines. As per the current scenario, the price may find strong support at $1650 as well as 200 EMA before continuing to push higher. Whereas, MACD Histograms are also showing Bullish Divergence in the making, which may add to the confluence for a further bullish move.
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Gold Breaks Below Daily Dynamic Support
Gold has been bearish throughout the week and recently broke below the important support of $1700. Though the Yellow Metal has been extremely volatile, the dynamic level was not breached in the recent Gold Bullish Trend.
image: Gold Daily Chart
According to the daily chart, the price has been converging as well as diverging at the same time since it rejected $1750. Currently, the worrying sign for the Gold bulls is violation of the dynamic level of 20 EMA which has been holding the price higher throughout the Bullish trend in place. Though $1650 is an important support area and can hold the price higher but certain correction may take place along the way.
So, if the price could not sustain above $1650 in the coming days, then Gold bearish pressure may extend and push the price lower towards $1535 again. On the contrary, breaking above $1700 again may empower gold bulls further to push the price towards $1800.
To Conclude, XAUUSD is currently quite volatile and strong with the bearish pressure. Despite the Bullish trend in place, the price is likely to consolidate. We should only expect further bullish developments from Gold above $1650