Your view on gold last week would depend on your perspective. As a gold bug or investor, it was a bad one which does not bode well for the medium term. But as an intraday gold trader, it was an excellent one and was an inverse of the price action for US indices. Whilst they fell and the rose, signalling bullish momentum, gold rose then fell, closing the week back near the open.
For the daily chart, this was denoted by a wide spread up candle on Tuesday, followed by a wide spread down candle on Friday on good volume and confirming the fragile nature of the technical picture for gold with the move lower largely driven by a flow out of safe haven following the Non Farm Payroll data.
The issue now is where and when gold is likely to find some solid technical support, and at present on the daily chart this appears to be waiting in the $1452 per ounce region. Here we have a cluster of two levels denoted with the blue and red dashed lines. Whilst individually not strong, as a cluster their strength increases. These levels are delivered automatically by the accumulation and distribution indicator – the thicker the line the greater the strength of each level. In addition and to add further to the bearish picture, the volume point of control is adding further downwards pressure from the $1512 per ounce area, and with light volume now below on the VPOC histogram to the right of the chart, gold is likely to move through here relatively unopposed.
Moving to the weekly chart, this perhaps makes the point more clearly, with last week’s price action and the associated volume portraying this weakness. And on this timeframe, the next significant level of strong support is well below in the $1420 per ounce area and denoted with the blue dashed line. This is followed by a low volume node on the VPOC histogram down to $1400 per ounce and below. Not an encouraging sign for gold bugs and investors, and confirmed with the trend monitor indicator which is now in transition from bullish to bearish, with the yellow trend line also falling. Any change to bright red on this time horizon will be bad news indeed.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
Hello, madam. I’m a Chinese trader. I’m surprised to have bought your book in China and benefited a lot. Inadvertently find and visit your home page, thank you for sharing.
Hi Yu – many thanks for getting in touch and thank you for investing in my book on Volume Price Analysis and I hope you enjoyed it – all best Anna