ICM Technical Analysis : XAU/USD (Gold) 4 March 2020

ICM Technical Analysis : XAU/USD (Gold) – 4 March 2020

Demand for the safe-haven metal surged Tuesday after the US Federal Reserve announced a surprise rate cut of 50 bps. US government bonds rallied, sending yields lower; the Japanese yen also caught a strong bid as did the Swiss franc. The US dollar index, or DXY, tumbled for a fourth consecutive session, dipping its toes in waters south of 97.00.

Technically, bullion retested February’s opening level at 1593.0, albeit not to-the-point, and advanced, with price action on the H4 timeframe seen closing in on resistance at 1655.3 (also denotes Quasimodo resistance [see left shoulder marked with black arrow]). What’s also interesting is a 78.6% Fibonacci retracement ratio standing at 1663.1. Note also the relative strength index (RSI) is poised to shake hands with overbought levels.

The weekly timeframe shows that despite the week concluding in the shape of a bearish outside candle pattern, capped by resistance at 1667.3, gold reclaimed all of the prior week’s losses. As a result, traders could see the said resistance re-enter the fray this week.

On the daily timeframe, support at 1550.3 was left unchallenged prior to yesterday’s advance, with upside reasonably free until crossing swords with resistance coming in at 1687.4.

Areas of consideration:

Between the 78.6% H4 Fibonacci retracement at 1663.1 and resistance at 1655.3 denotes a potential ceiling today. However, in order to avoid whipsaws, traders may embrace weekly resistance at 1667.3 and expand the potential reversal zone, marked using a yellow box. Although this contains weekly structure, daily resistance falls in at 1687.4, therefore, the possibility of price running through the said reversal zone is certainly there. Consequently, traders may seek additional confirmation before committing.

Disclaimer: The information contained in this material is intended for general advice only.