As of August 2018 gold started showing signs of a bullish reversal as seen from the chart above and using only Fibonacci Retracement levels from the Swing Low to the most recent Swing High on the Daily Chart we can see the pair (XAUUSD) racing upwards due to various fundamental factors over the period from $1155.77 towards a 7 year high $1690.00 almost hitting $1700 very recently in the month of February 2020 but the most recently scary factor boosting the price higher is Coronavirus (COVID-19) as investors started seeking for safe haven after the virus spread in Italy and other parts of Europe. But you all must have heard that what goes up at some point must come down and vice versa. So is this it?
Hence, as seen from the chart on Friday 28 February, gold recorded a sharp drop from a high of nearly $1700 towards $1560. This is likely because hedge funds cashed out earlier gains in the yellow metal to cover losses elsewhere as DOW 30, S&P 500. NASDAQ & the German DAX continued their slump as COVID-19 was spreading at a fast pace causing fear and panic among investors and the financial markets worldwide. Gold, not so safe haven after all!
Here is what to expect this week from the precious metal from a technical view. {Long Term View}.
By adding a little more clarity to the chart, the 50MA (Moving Average), 100MA and 200MA, we clearly see the sharp drop which occurred on Friday represented by the very last red candle on the chart seen sitting just on top of the 50MA unable to break below it just yet. As the market opens Monday, we have no choice but to wait for a confirmation to sell below the 50MA sending the pair lower to test the 100MA towards price $1520. If it succeeds to drop lower over the long term period then the pivot level at $1423 will become magnetizing and attractive as the next aim. Failure to break, the scenario for gold will shift to bullish but limited. Nevertheless, expect some consolidation happening as the next move starts building up and remember the trend is your friend.
This week is full of fundamental news and events.
It’s going to be a very busy week for the markets loaded with high impact events. From RBA (Reserve Bank of Australia) rate statement decision, Australia’s GDP (Gross Domestic Product), BoC (Bank of Canada) rate statement decision, Canada’s GDP and of course NFP (Nonfarm Payrolls) THIS FRIDAY!
