Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Chart Of The Day: Gold's Running Out Of Steam

By Investing.com (Pinchas Cohen/Investing.com)CommoditiesAug 02, 2022 11:19
uk.investing.com/analysis/chart-of-the-day-golds-running-out-of-steam-200529627
Chart Of The Day: Gold's Running Out Of Steam
By Investing.com (Pinchas Cohen/Investing.com)   |  Aug 02, 2022 11:19
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
XAU/USD
+0.01%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
Gold
-0.30%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DX
-0.15%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
US10Y...
-0.28%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
PTRN
-2.05%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
IX
0.00%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
  • Pelosi's Taiwan trip provokes China
  • Worries investors 
  • Treasuries and the dollar rally siphoning demand from gold 

Geopolitical tensions have risen on concerns about US House Speaker Nancy Pelosi's visit to Taiwan. 

China responded to the news with a sharp warning. Beijing stated that its army would "never sit idly by" and "uphold China's sovereignty and territorial integrity."

The heightened diplomatic crisis exacerbates pre-existing concerns over an economic slowdown, triggering market risk-off and sending US futures lower amid a European market decline following an Asian selloff.

However, while increased demand pushed Treasury yields on the 10-year note to open lower, gold has failed to maintain its recent gains. At the same time, the dollar rallied for the first time in five sessions.

Not only does a rising dollar siphon away investment from the competing haven, gold, but a strengthening dollar renders the dollar-denominated gold overpriced, weighing even more on its price.

Gold Daily
Gold Daily

Gold realized its H&S bottom's implied target. Now that it's neared the top of its falling channel—a clear downtrend boundary defined by buyers and sellers—where sellers have been taking over control.

Also, today's trading pattern is developing a possible (imperfect) shooting star. The candle's small body demonstrates apparent price equilibrium, while the long upper shadow reveals the path the bulls gave up to bears.

The fact that this power struggle takes place at the top of the channel underscores the potential bullish fallout. The pattern is imperfect, as it also developed a small lower shadow. This price action may be noteworthy as it may mean that some buyers are profitable and will therefore not be shaken. Still, the disproportionately longer upper shadow increases the odds that many more bulls are already in losses, and a further decline thus heightens the chances for their selloff.

The shooting star is not in itself a significant reversal signal. I am adding it to the weight of the evidence of a bottom whose implied target has been achieved, and the price reached the resistance of both its channel top and its preceding low, registered May 16. Finally, the candle's bearish bias is only valid on a closing basis, as it still might change today.

However, even if the price's close is $1,792, it will have produced a high-wave candle. This pattern displays fear. All sound and fury, but signifying nothing. After running to and fro, the price remained unchanged. Again, that in itself is not necessarily bearish. It could just be a pause, but given that other factors are bearish, it increases the odds of a downward move.

Trading Strategies

Conservative traders should wait for resistance confirmation with a long red candle and then for a corrective rally to reduce exposure.

Moderate traders would be content with evidence of supply.

Aggressive traders should short after the price closes with a shooting star or wait for further resistance evidence if the price produced a high wave candle.

Whatever the strategy, trading without a coherent plan, you are committed to gambling. Ideally, you'd have a plan incorporating your timing, budget, and temperament. If you don't have that, you can practice with my sample for educational purposes, not profit, or you'll end up with neither. 

Trade Sample - Aggressive Short:

  • Entry: $1,792
  • Stop-Loss: $1,812
  • Risk: $20
  • Target: $1,692
  • Reward: $100
  • Risk-Reward Ratio: 1:5

Author's Note: I am not in the business of fortune telling. If that's what you're looking for, I'm sorry. I am an analyst. That means I analyze an asset or market based on the evidence as I understand it. Note that all forms of analysis are based on the past, which is not guaranteed to be repeated in the future. Moreover, they are based on statistics, meaning that anything can happen on a trade-by-trade basis. The goal is to operate according to a plan that suits your needs, which you will trade consistently, allowing you to keep your account solvent until you catch up with statistics. Happy trading.

Chart Of The Day: Gold's Running Out Of Steam
 

Related Articles

ING Economic and Financial Analysis
The Commodities Feed: FOMC Day By ING Economic and Financial Analysis - Sep 21, 2022

Price action across commodities is likely to be dictated by today's FOMC meeting. A 75 bps hike is likely priced in, but anything more aggressive could put further pressure on the...

Chart Of The Day: Gold's Running Out Of Steam

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
Dishant Deshani
Dishant Deshani Aug 02, 2022 18:39
Saved. See Saved Items.
This comment has already been saved in your Saved Items
if gold is negative than can we say that dollar will also go down
Dishant Deshani
Dishant Deshani Aug 02, 2022 18:39
Saved. See Saved Items.
This comment has already been saved in your Saved Items
if gold is negative than can we say that dollar will also go down??
ashwin govindarajan
ashwin govindarajan Aug 02, 2022 13:28
Saved. See Saved Items.
This comment has already been saved in your Saved Items
gold is breaking out on upside..see yourself...1950 target
Lidiya Abera
Lidiya Abera Aug 02, 2022 13:28
Saved. See Saved Items.
This comment has already been saved in your Saved Items
his
Amirul Othman
Amirul Othman Aug 02, 2022 13:28
Saved. See Saved Items.
This comment has already been saved in your Saved Items
it was ⁸⁸ⁿ9/ lokasi mom AC
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email