FX.co ★ Strategy of the day on GOLD

Gold approaches the upper limit of its medium term bullish channel at 1,432 suggesting a decline. However, a break of these levels will initiate a more violent bullish channel.

Technical indicators do not provide clear signals but until the resistance is not broken the assumption of a decline is most likely. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement.

Gold is currently testing the upper limit of its channel, so we recommend 2 scenarios: The first one is the hypothesis of a decline - then we recommend a sell on the level of 1,432 with the 1st objective at 1,422 and then at 1,420 A break through 1,435 will invalidate this scenario. The second scenario is a break of its resistance - then we recommend a “buy stop” that’s means to buy the gold as soon as it has broken through its resistance of 1,432 with the 1st objective at 1,442 and then at 1,445. A break through 1,429 will invalidate this scenario.