Summary:
- Gold breaks to new YTD high
- Key support localized at $1323 handle
- 161.8% Fibo level of the latest downward impulse could be the next target for bulls
Gold extended an upward move on Friday and broke to the highest levels since the beginning of the year. Taking a look at the W1 interval, one can see that the price is testing key supply zone. The $1355-1365 area halted upward impulses back in 2016, 2017 and 2018. In case this resistance is broken, we could expect uptrend to accelerate. Of course, one cannot rule out the possibility of a pullback occurring earlier as the recent gains were rapid to say the least. Bulls seem to be better positioned due to the uncertainty surrounding US-China trade conflict and Middle East tensions.
Source: xStaiton5
As the upward momentum looks solid, traders should be double cautious when considering short positions. Recently broken $1342 handle should now serve as the nearest support level. In case a deeper pullback occurs, the price could fall to as low as $1323 handle - level that would equate potential pullback with the previous largest correction during this upward impulse.
Source: xStaiton5
Moving onto the intraday frame - H1 interval - we also can see that the recent gains were really rapid. The precious metals is pulling back from the 127.2% Fibo level of the latest downward impulse. However, as the trend is solid an upward move towards the 161.8% Fibo level cannot be ruled out. This level lies within the supply zone from D1 interval therefore sellers could become more active there. However, keep in mind that playing against a trend is not the best idea.
Source: xStaiton5
