Gold Technical Analysis, October 20, 2020

Exclusive Markets Analysts
Exclusive Markets Analysts


Technical Outlook:

Gold seems to have managed to carve a meaningful top at $2075 in August 2020. The yellow metal has dropped through $1848 lows, before pulling back. Also note that the drop was sub divided into 5 waves, making an impulse and hence any pullback should be well capped below $2075.

Gold has been producing a counter trend rally since printing lows around $1848 mark recently. The metal had reached $1932 mark before finding resistance and pulling back. It is quite possible that the recent rally could be lower degree Wave A within the corrective structure.

If the above is correct, Gold might have produced Wave B lower towards $1885 over the last week. If the corrective rally is still unfolding, the metal should push towards $1950/80 levels going forward. Bears might remain inclined to resume lower from there.

Also note that $1980 is very close to fibonacci 0.618 retracement of the earlier drop between $2075 and $1848 respectively. High probability remains for a bearish turn, if prices manage to reach there. Further, the previous lower degree Wave 4 also terminated around $1975 levels.

With all the above convergences meeting around $1975/1990, Gold remains vulnerable for a bearish reversal if the counter trend managed to reach there. Alternately, a push through $2015 might test $2075 levels, going further.

Looking at a higher degree, Gold seems to be a good candidate to be sold on rallies through $1980/90 mark. A drop below $1848 will accelerate towards $1670 and further.

Trading Strategy:

Short against $2075, target is below $1670.

Legal Disclaimer: This article is not investment advice. The data provided is for marketing material purposes and is not intended to confuse nor guide our clients on trading decisions. Any investment activity performed is perceived to be a self-directed decision. Exclusive Markets is not liable for losses that may occur because of a decision made after reading the information published on our research page or any other media.

Risk Warning: Trading the capital markets is risky therefore further knowledge and experience may be required. Apply appropriate risk and money management always and ensure the implementation of safe leverage.

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