Hello traders ! It has been 2 weeks since our last update about gold market. Our team took a 2 weeks of vacation from 4th of July or Independence’s Day to refresh our energy after going through a month of super busy gold market all days and nights in June. Now let’s get back to gold market which has been trading pretty much sideways since the beginning of July. In our last analysis, we expected a correction to 1365-1375 after G20 meeting in Japan but gold only dropped to 1380-1382 before bouncing back. Since then, gold has been in a corrective sideways pattern that sooner or later will break out or break down.
We think gold may continue trading in a range between 1380 and 1440 for a while, at least until the end of this month. Please take a look at the 4-hour chart above. Since the starting point of the rally from 1275, gold had been on the green uptrend line until it broke down recently. Now gold is trading above the yellow uptrend line which is more gradual than the green uptrend line. That means the upside momentum has weakened recently. You can also see both the upper resistance at 1438-1440 and the lower support at 1380-1382 were tested twice but gold failed to capture any moves above or below them. It signals us that gold will remain to trade sideways between 1380-1382 and 1438-1440 while it is deciding the next direction it is heading to. With the bullish sentiment in this market, an upside breakout to a new high is more favored but gold will need a new catalyst to claim to a higher high than 1440. Please note that all that rate cuts and trade wars or political tensions are already priced in price of gold above 1400. So we do not rule out a lower move here under 1380 as well.
For the short term, gold is congested in a triangle on the 4-hour chart above. A breakout of the triangle to the upside may lead gold to test recent high at 1438-1440. While a breakdown of the triangle to the downside may lead go to test major support at 1380-1382.
For now, we believe the best action is not to do anything until a real move comes in. Otherwise you might be fooled by the market makers who use computer trading to make bull and bear traps. For example, they can push price up to upper resistance at 1438-1440 and then reverse price quickly to the downside. Vice versa, they can also push price down to lower support at 1380-1385 and quickly reverse price to the upside. That kind of manipulative activity is use to trap you on both sides and hunt for your stop loss. However, you can try strategy for trading a sideways pattern is to sell near upper resistance or buy near lower support. Though you will have to set tight stop loss above upper resistance if you sell or tight top loss under lower support if you buy.