TA of the Day: Gold Surges to New Highs! Is a Reversal in Sight?

By Investor Empires On Aug 21, 2024

Gold diggers – literally and figuratively – should be in high spirits right now! 😂

Gold continues to hit new record highs, rising above $2,500, driven by a weaker US dollar and expectations of a Federal Reserve rate cut in September.

With its reputation as a stable investment during turbulent times, geopolitical instability and economic concerns have also led to increased demand for gold.

Analysts predicts Gold could reach $2,600 by the end of 2024 and possibly $3,000 by mid-2025.🤔

As gold hits new highs, market sentiment remains positive. But is this rally too good to last?

Are there signs that the market is peaking as prices continue to rise? 😟

Welcome to Teaching Assistant of the Day (TAOTD)! 👋

Let’s focus on the current technical setup of XAU/USD Based on the daily chart:

📈 Technical analysis of XAU/USD (Gold) on the daily chart

Let’s analyze gold Using the basic technical analysis concepts we covered in our Forex course.

Simple Moving Averages (SMAs):

10 period simple moving averageIt is located at the level of 2,473.04. The current price is above This level indicates strong short-term bullish momentum. To the top The slope reflects continued short-term buying pressure.
50 period simple moving averageLocated at 2,395.48. Price is good. above This level, which reinforces the ongoing upward trend in the medium term. To the top The slope of the 50-period simple moving average indicates continued strength.
100 period simple moving averageIt is located at the level of 2,369.97. The price is: above This level confirms the medium-term bullish momentum. The slope is To the topindicating continued optimism in the market.
200 period simple moving average:Located at 2,216.20. The price is very high. above This level, highlighting the strong long-term bullish momentum. To the top The slope confirms the long-term uptrend.

Relative position of moving averages:

The 10-period simple moving average is above The 50, 100, and 200 period simple moving averages indicate a strong short-term uptrend within an overall bullish environment.
The 50-period simple moving average is also above The 100 and 200 period simple moving averages confirm the steady upward pressure across all time frames.

Relative Strength Index (RSI):

The RSI is currently at 64.23indicating that the market is in a bullish zone but has not yet reached an overbought level.
This suggests that there could still be room for further upward movement before the market encounters potential resistance.

🕵️ Key Notes

Price action:

Let’s analyze the recent price action of XAUUSD (Gold) based on the chart:

Strong uptrend: The most notable feature is the strong upward trend, which has become particularly evident since March.
A series of highs and highs: Price action consistently shows higher highs and higher lows, which is a key characteristic of a strong uptrend.
Acceleration trend: The uptrend has accelerated significantly over the past few weeks, indicating increased bullish momentum.
Minimum declines: During this recent uptrend, there have been very few major pullbacks, indicating continued buying pressure.
Unification details: There were short periods of consolidation followed by strong rallies, and this was particularly evident in late July and early August.
Bullish candles: The last candles are mostly bullish (green), with relatively small wicks, indicating strong buying pressure.
Volatility: gold fluctuations Prices have been rising in recent weeks, with larger candle bodies indicating strong directional moves.
Exceeding the psychological level: The price has recently broken through the important psychological level of 2,500, which is a bullish signal.
New all time highs: Gold has recently broken through previous resistance levels to reach new record highs.

Main levels:

2,500: An important psychological level has been broken recently!
2,400: Great level of support!

Support and resistance levels:

Potential resistance: Psychological level 2550.
Immediate resistance: Current all-time high at 2531.
Instant Support: Around 2,470 (10 SMA).
Strong support: 2400 (psychological level and close to 50 SMA).

Relative Strength Index (RSI):

It is approaching the overbought area but has not reached it yet.
Shows strong momentum with room for further upside.
There are no signs of exhaustion or divergence on the RSI.

🤔 Possible trade scenarios

He is Gold buy or sell?

The following trading scenarios are provided for educational purposes only. Since they do not include full risk management practices, they are not intended to serve as actual trading recommendations, but rather as food for thought to help you generate your own trading idea.

Long bias:

Point of ConsiderationConsider entering a long position if the price finds support near the 10-period simple moving average at 2,473.04 or in case of a pullback to the 50-period simple moving average around 2,395.48. A strong break above the 2,530 level could also provide a buying opportunity.
Point of cancellationConsider placing a stop loss below the 50-period simple moving average at around 2,390 to manage risk.
potential targetWe expect a move towards the 2,550 level or higher if the uptrend continues.

RationaleStrong bullish momentum and proximity to key psychological levels suggest further upside potential, with 2,500 a crucial area to watch. Continued momentum could push the price towards 2,550 and beyond!

Short bias:

Point of ConsiderationConsider entering a sell trade if the price shows signs of rejection around the 2,500 resistance level or if there is a bearish divergence in the RSI.
Point of cancellationConsider setting a stop loss above the recent high at around 2,515 to manage risk.
potential targetThe initial target could be the 10-period simple moving average at 2,473.04, with further downside potential towards the 50-period simple moving average at 2,395.48.

RationaleProximity to overbought RSI levels indicates a potential pullback or consolidation. failure to stick A breakout above 2,500 could signal a short-term reversal. A pullback could find support at the 10-year SMA (2,473) or the 50-year SMA (2,395).

📝 TAOTD Summary

Current positionThe price is in a strong uptrend, testing the psychological resistance at 2,500. The bullish momentum is supported by the position above all major simple moving averages and a fairly strong RSI.
directionThe overall trend is bullish, with the price well above the 200-period simple moving average, confirming long-term strength. The short- and medium-term trends are also bullish.
Main levelsSupport is at 2,473 (10-period SMA) and 2,395 (50-period SMA), with resistance at the recent all-time high (2,531).
batchThe RSI indicates strong bullish momentum, with potential room for further upside before reaching overbought conditions.

Technical picture of gold: strong rise

Recent price action indicates that Very strong bullish sentimentT in the gold market.

Multiple breakouts to new highs, and a break above the psychological level of 2500, indicate that Buyers are in control..

A series of higher highs and higher lows, along with the price consistently remaining above major moving averages, Enhance buyer control.

The RSI, although rising, has not yet reached the extreme overbought zone, indicating that Potential for further growth.

but, Given the recent high. You should be aware of this. Such strong moves can sometimes be followed by pullbacks or consolidations.

the No major setbacks In the latter direction it may indicate to caution In the very short term.

A Breakout above current high This could lead to further gains, while Drop below the 10 simple moving average This may indicate a short-term correction.

Overall, the market structure suggests that gold is in a strong bullish phase.

The overall structure will remain bullish as long as The series of higher lows is maintained. And the The price remains above the major moving averages.. 👍