Earlier shift to policy tightening weighs on gold prices
Improved global growth prospects and earlier shift to monetary tightening by central banks is bearish for gold. Will gold continue falling?
The XAUUSD: D1 has fallen below the 200-day moving average MA(200) on the daily chart, and son will test the support line of the uptrend.
- Parabolic indicator gives a sell signal.
- The Donchian channel indicates no trend yet: it is flat.
- The MACD indicator is below the signal line and the gap is widening, this is bearish.
- The stochastic oscillator is falling but has not reached the oversold zone.
We believe the bearish momentum will continue after the price closes below the lower Donchian boundary at $1236.27, supported by the fractal low. A pending order to sell can be placed below that level. The stop loss can be placed above the fractal high at $1258.64. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop loss level ($1258.64) without reaching the order ($1236.27), we recommend canceling the position: the market sustains internal changes which were not taken into account.
Summary of technical analysis:
| Position | Sell |
| Sell stop | Below 1236.27 |
| Stop loss | Above 1258.64 |