Gold Market Analysis – June 5th 2019

Last week we talked about the critical support at 1275 and were cautious about how gold did not close the last few weeks under 1275. Here is what we said, begin quote “For intermediate term, we still remain cautiously bearish on gold and look for gold to correct deeply to 1240 or even lower as long as gold trades under 1310. However, we need to see gold close several weeks under 1275 so we can be comfortable with our weekly target at 1240. The reason we stay cautious about our weekly bearish case because gold has failed several times to close its weekly under 100-week moving average, which is a sign of buyers on dip”, end quote.

Our caution was indeed correct because the gold market has taken a big turn up from that support 1275 to over 1330 in just a couple of days. The financial market took a big shock when President Trump surprisingly threatened to put tariffs up to 25% on Mexico, starting from June 10th. This news has created a big fear in the market, and investors decided to flee to gold as fear of recession coming. This has changed our perspective from being bearish to being bullish for the intermediate term of the gold market.

Gold 4-hour chart

So during last week when we saw that support at 1275 seemed to provide very good base for gold, we in fact sent out a signal on TradingView to go long on gold at 1285 and target 1310. You can see the idea again on the above 4-hour chart. Or you can simply click the following link: Inverse Head & Shoulders Pattern on 4-hour Chart . If you followed us on TradingView, you would be able to make some profit. If you do not, please go to TradingView and subscribe to our channel here: GOLDTREND.NET on TradingView

Gold Weekly Chart

As we said, there was still a possibility that gold could reach 1240 as long as gold traded under 1310. It means when gold trades above 1310, this assumption is no longer valid. In fact, we stoped all our intermediate short positions after gold trades above 1310. Now we, of course, are bullish again for both short and intermediate periods. We think the recent run in gold is truly impressive, and gold can probably reach up to 1360 before some kind of correction. We do not think it is a good idea to short this market. However if you want to do a counter trade, you will have to set a very tight stop loss. Even though the intraday chart shows gold at very overbought level, there is no guarantee that it won’t stop going up.

Take a look at the above gold weekly chart. Gold bounced off nicely from the uptrend line and the 100-week moving average at 1275. The follow-through weekly candles are big green candles, which show momentum of buying . Weekly MACD is about to have a cross over. RSI indicator is at the bullish area and heading straightly up north. All of these indicate a big bull trend ahead. By taking a fibonacci extension, we can see the minimum target at 0.618 level which is 1360. At that 1360 level, we think gold will find resistance as it is the significant resistance for the last 2-3 years. And there is also a neckline of the inverse head & shoulders pattern of the weekly chart which will act as strong resistance. So we think gold will have a bit of correction from that 1360 level down to somewhere near 1310-1320 before rocketing up north to finally breaks the neckline. If gold breaks the neckline, we think gold can totally reach 1450 to 1500 within the next few months.

Well, our short term target is 1360 but we do not want to chase the price up because the intraday chart shows gold very overbought. Instead, we would like gold to correct down a bit before going up to 1360. If it does, we will look for a setup to buy on dips. For the intermediate term, we stay bullish as long as gold trades above 1300. Our intermediate target now is 1450 to 1500. So for now, we would like to see a minor correction in gold to jump in the bull wagon. We will send you or post our view on TradingView once we see a good setup.


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