Gold: Is the MACD turning in or is it a false signal?
Gold is a chameleon. It can quickly change from a structural break to re-test, disguising its true intentions.
The January 18 chart formation, the triangle, dissolved gold by a false outburst. The market did not move directly up but first hit the 1275 low before reaching a new high of 1326 on the last trading day in January.
Since the beginning of February, prices have dropped, and the market showed a downward correction. This movement could form a flag pattern. A flag pointing downwards would be a positive sign for the uptrend.
The MACD histogram, on the other hand, may be about to turn in. The question here is whether this is a valid signal, or whether the market is showing its own will again and it is a false signal.
From a chart technical perspective, the uptrend is still intact. The market is showing a sequence of higher highs and higher lows. Should a flag emerge, this would be positive because such a formation is usually dissolved upwards.
If the bulls stay tuned, the old structural levels are valid. The first significant resistance on a further path to the upside lies in the 1335 range. If these are overcome without difficulty, the way to the April 2018 highs in the 1352 range could also be clear.
Towards the downside, the market should find its first support at the uptrend line and the highs from the triangle formation in the 1295 area. If the market breaks further down, 1264 could offer further support. If it reaches this area, it’s time for a reassessment.
Gold Daily Chart | Source: ActivTrader
Written by Daniel Schuetz, External Analyst
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