Risk on, stocks up and gold down

Chart_16-05-09_16-26-02

Gold, Daily

Gold prices have come off (-0.88%) as money has flowed into equities and markets are in a risk on mode. German Dax is up by 1.49% together with Eurostoxx 50 rising by 1.5%. Elsewhere, Indian CNX Nifty index is up by over 1.7% at the time of writing. The price of gold created a bearish doji candle in the weekly chart last week. In the daily time frame price has created a lower high. Both of these technical factors suggest weakness in the price of gold and increase chances of price moving lower in the coming days. Also, Stochastic oscillator (daily) is pointing lower.

There was a minor support at 1270 – 1272 that gold has now broken. We could see gold move all the way down to between 0.5 and 0.618 Fibonacci retracement levels where the 30 and 50 period moving averages currently reside. Should gold move to these levels, it’d be near the rising channel low and fairly oversold. I am therefore looking for long entry signals inside my buy area at 1243.80 – 1255.50 range with Target 1 at 1265.50 – 1276 and Target 2 at 1281.80 – 1291.40.

Janne Muta

Chief Market Analyst

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About Janne Muta, HotForex’s Chief Market Analyst

jmutaJanne Muta is a seasoned industry professional with over 16 years experience in the global markets. Originally from Finland, Janne has worked for institutions in both Helsinki and London as an institutional fund manager, global market analyst and FX educator.

Traders and fund managers from around the world have benefited greatly from Janne’s technical analysis methods. The indicators and price action based trading models he has developed, have, after rigorous testing, proven to be invaluable in identifying high probability trades.


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