According to MarketMilk™, gold (XAU/USD) performed well last week, ending with a gain of over 8%.
It’s also showing bullish price momentum with its 3-month, 6-month, and yearly performances all in the green.
Here’s a chart of how XAU/USD has performed over multiple timeframes:
Currently, gold’s Trend Following Rating is “Bullish”.
Looking at the rating’s breakdown, we can see that gold is trading above ALL its simple moving averages from its 5 SMA to 200 SMA.
Gold is also trading above all its exponential moving averages from its 5 EMA to 200 EMA.
Gold’s short-term trend strength is bullish.
As well as its long-term trend strength.
Let’s take a look at gold’s daily (1D) chart.
We can see that the price fell all the way down to its 200 SMA, chopped it up for a bit, but this dynamic support level was able to eventually hold.
Price rebounded and is now trading back above its 20 and 50 simple moving averages.Near-term support levels are 1580….and then 1500….and then 1452.
Let’s zoom out a bit and take a look at gold’s weekly (1W) chart.
Gold had been in a multi-year consolidation trading between 1046, its 2015 low and 1375, its 2016 high.
In 2019, it finally broke out!
The next major resistance area is 1800….and then at its all-time high at 1920.Gold is also trading above its 20 (orange) and 50 (blue) simple moving averages. And waaay above its 200 SMA (purple).
All bullish signs.
In the near-term, I look for any price weakness to bounce off the 50 SMA (blue line)
With global central banks “printing” money and “making it rain” to try and support their economies, I see increased demand for gold as investors look to hedge against long-term inflation risk.Back in August 2008, during the Great Financial Crisis, gold prices initially fell ~20% from 875 to about 710…and then went on a bull run and almost tripled in the next 3 years.
With the market meltdown due to the Coronavirus Crisis, something similar could happen again.
We already saw gold fall from a recent high of 1703 fall to 1452 and rebound.
Last month (Feb), gold reached a monthly high of 1689.
With March coming to an end this week, a close above Feb’s monthly high would imply further advance to the upside.
Here’s my trade idea…
Long XAU/USD at 1600.
Stop loss (SL) at 1540.
Initial profit target (PT) at 1800.
But will look to target gold’s record high at 1920.
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