Gold: A Coiled Spring Ready to Unwind
As gold prices recalibrate in recent weeks, let’s explore pivotal levels worth monitoring for potential trend continuation and mean reversion trades.
Pullback Leads to Price Compression
After a robust surge of over 20% between February and April, gold has entered a phase of 'mean reversion' over the past fortnight.
Gold prices have retraced to the basis of the Keltner Channels, a zone closely monitored by trend traders.
Furthermore, the market is exhibiting signs of compression within tightening trading ranges. A formation of lower swing highs into horizontal support has shaped a small descending triangle pattern. Notably, each of the last two trading days has witnessed the narrowest range in over seven consecutive sessions.
This intense price compression resembles a coiled spring, poised for release at any moment.
Key Triggers to Watch:
Prior Day's High (PDH):
Given the overarching uptrend, a decisive break above PDH could serve as the catalyst for resuming the trend, potentially leading to a retest of recent highs.
Last Week's Lows:
Conversely, a decisive breach below last week’s lows might trigger a deeper retracement towards the volume-weighted average price (VWAP) anchored to the February 14th swing lows.
Gold Daily Candle Chart
Past performance is not a reliable indicator of future results
Gold Hourly Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84.01% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Pullback Leads to Price Compression
After a robust surge of over 20% between February and April, gold has entered a phase of 'mean reversion' over the past fortnight.
Gold prices have retraced to the basis of the Keltner Channels, a zone closely monitored by trend traders.
Furthermore, the market is exhibiting signs of compression within tightening trading ranges. A formation of lower swing highs into horizontal support has shaped a small descending triangle pattern. Notably, each of the last two trading days has witnessed the narrowest range in over seven consecutive sessions.
This intense price compression resembles a coiled spring, poised for release at any moment.
Key Triggers to Watch:
Prior Day's High (PDH):
Given the overarching uptrend, a decisive break above PDH could serve as the catalyst for resuming the trend, potentially leading to a retest of recent highs.
Last Week's Lows:
Conversely, a decisive breach below last week’s lows might trigger a deeper retracement towards the volume-weighted average price (VWAP) anchored to the February 14th swing lows.
Gold Daily Candle Chart
Past performance is not a reliable indicator of future results
Gold Hourly Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84.01% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
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