Two weeks after Russia’s attack on Ukraine, gold prices reached the maximum of the year. Starting on March 8, the gold price began to fall. Last year, the price of $1680/oz was a strong support. This year, too, in mid-July, demand appeared at this level and the price rebounded by more than $120/oz. However, the last weeks of September proved to be less kind to gold and its price fell to 2020 levels, setting a minimum for the year at $1615/oz.
In the weekly chart above, we see that the $1680/oz level is the neckline of a double top formation. This is a trend reversal formation, and often sharp declines follow after the neckline is broken. This time, however, the price has once again returned above 1680 and this may herald an upward correction and negation of the downward scenario.
A bullish engulfing formation appeared on the daily chart. At the same time as the formation appeared, an upward divergence was formed between the price chart and the MACD. Today the price broke out of the formation while overcoming the mentioned two-year support, which has now become resistance.
High probability of continuation of the upward correction. A good opportunity to open a BUY position would be the previously defeated neckline of $1680/oz if the price returns to this area. The first demand target could be the round level of 1700 and the next is 1730 where the September maxima are located.
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The above analysis is based on the PA+MACD strategy, a detailed description of which you can read HERE . I will talk more about the PA+MACD strategy applied to these currency pairs during the live trading sessions which you can attend from Monday to Friday.
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