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Gold on a crucial mid-term support

ByAlpari Research & Analysis
AuthorTomasz Wisniewski
Published 10/30/2017, 04:14 AM

Second half of the October is bad for Gold. The price is declining almost every day and is close to create a major sell signal in the mid-term. Fundamentally, the main two reasons for this downswing are the risk on mode on the markets, negatively affecting the safe heavens and the stronger USD. The risk on mode itself would not be such a big problem alone as the gold dealt with that in the past but the appreciation of the Green back is really negatively affecting the price of the XAUSUD as the correlation between the USD Index and the Gold is significant.


Currently the buyers are defending on the last crucial support here so they still have some hope. This support is created by few bullish elements. First of all, we do have a black up trendline here (connecting higher lows since the end of 2016). Second factor is the blue down trendline (connecting lower highs since the July 2016), which was broken in August and now can be used as a support. In addition to that, we do have two important Fibonacci lines, 61,8% of the latest upswing (brown) and the 38,2% of the main trend (light blue). All that coming together creates an 8 USD wide support and is marked with a green colour on the chart.


Do not take the bounce here for granted,for the buy signal, we need to see a demand here first. The price action on Friday can be promising but is not enough to claim the victory. For the buy signal, the price has to break the red line connecting most recent lower highs. On the other hand, sell signal will be created once the price will close the day below the green area. Gold daily

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