Despite down trend Gold market sentiment got better
How to use this chart:
- Big boxes with black boundary shows monthly trading
- Blue shaded boxes shows weekly trading
- Green horizontal line shows monthly Open Price
Technical concepts involved
- Up trend = higher highs, higher lows
- Down trend = lower highs, lower lows
- Highs and lows are also technical support resistance levels (concept similar to 52-highs, 52-week lows)
- If Price now > Open Price, Market Sentiment -> bullish (see posting ‘Open Price as Market Sentiment Gauge: Gold price bullish Silver not‘)
- If Price now < Open Price, Market Sentiment -> bearish
Can we call gold bottom yet? Market sentiment big improvement
Once the rules above were established, it is easy to arrive at this conclusion for gold price.
- Gold price continues in its down trend. There is no sign of reversal from month to month action which we can see from the black boxes.
- This month’s best is still deep below June high. At best this month could be a consolidation. It could even be building sideways for further fall.
- The week to week trading suggest something very different. It is the strongest performance since 15- 16 weeks in terms of ability to penetrate deeply to the topside (clearly above Week 27-high). Previous instances (see red ovals) show price ‘harassing’ previous week highs but without strength nor commitment.
- This weekly performance is not a buy signal. But it is certainly something to watch.
- As we can also see from chart, gold price closed below its open every month except March. This is a bullish development for market sentiment.
- If gold price could stay above July open, August could be something wonderful for gold bulls.
- If price could persist above the thick blue horizontal line i.e. Week 27 high, it is more wonderful because that would clearly reverse order by changing resistance to support.
Too early to call bottom but gold bulls in the lead so far this July
Week to week action and price in comparison to July open shows bulls in the lead. Patience is a virtue. The clearest signal we can get is a classical bullish reversal chart pattern but missing that, a big bullish expansion in the next fortnight or August will be a big plus.
If it continues down, the big big level to watch is 1091-1100. See this posting ‘Long term technical analysis of Gold and Silver price: Correction only‘.
Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.
“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.