With Biden now creeping towards the White House, but likely to be pressing the intercom at the gate for some time given the likelihood of a rerun of what occurred in 2000 now is a good time to consider the technical picture for gold both for intraday and short term traders as well as longer-term investors.
And on the daily chart, there are several key levels now coming into play as the metal continues to trade within the range of the last few weeks, oscillating between $1930 per ounce to the upside and $1855 per ounce to the downside. So where is it heading next?
First, we have a strong platform of support in place just below $1900 per ounce and denoted with the heavy blue dashed line of the accumulation and distribution indicator. This indicator for NinjaTrader paints the levels according to the number of times they have been tested and held firm, and as each test occurs, the line thickens accordingly thereby giving us a visual picture of support and resistance from a price based perspective. This level in fact came into play yesterday and provided the requisite floor of support in a volatile trading session. However, unlike many other markets, the volume here was muted, and whilst above average is certainly not extreme but reflecting the general indecision we currently see in currency markets and the VIX in terms of sentiment. So we have a strong platform of support in place.
Next comes resistance which is duly being tested at the time of writing in the $1919 per ounce level and denoted with the red dashed line. Less strong than the support region below, but nevertheless challenging, and for a continuation of the bullish momentum of early trading, one that needs to be breached with a clear hold above. Assuming it is, where next?
And the short answer to this question is for the metal to take out the $1935 per ounce level, where previous rallies in October have both failed, and if this occurs, we should see gold regain the VPOC at $1952 per ounce and denoted with the yellow dashed line. At that point expect to see further congestion develop as this will be the fulcrum of the market and is where the heaviest concentration of volume resides.
Longer-term I expect to see gold continue higher and through the $2000 per ounce region and beyond, but in the meantime, there are some challenging technical areas ahead and for each of these to be breached will require sustained volume.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
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