XAUUSD Technical Analysis
Gold today plummeted to a fresh monthly low to $1235, losing over 1% of its value against the USD.
Price has recovered and is currently sitting around the $1243 mark. Several news agencies suggest this move down was caused by a trader making a mistake, yet the rise in the dollar may have also contributed to this sell off.
With the worlds geopolitical situation still causing chaos I see gold rising from this short term set back and gaining traction as we move into the 3rd quarter.
Taking a look at the chart we can see where price held its ground. Paying close attention the 200SMA we can see this area acted as a floating support level and price bounced . This floating support level also coincided with the ascending trendline that has been acting as key support in the bullish trend which began in December 2016.
What is a temporary set back in golds longer term increase in value gives us a prime situation in which to take longs and buy gold at a low price.
With entries around current price and stops below the supply area at $1215 we give ourselves room to get out of trouble should the trend turn over. With reference to profit targets, the strong support and resistance level at £1305 gives us a risk reward ratio of around 2:1.
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