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Gold Price Nears Breakout as Trendlines Continue to Merge

Gold Price Nears Breakout as Trendlines Continue to Merge

2019-10-18 09:00:00
Nick Cawley, Analyst
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Gold (XAU) Price, Chart and Analysis

  • Gold finding support from weak China data.
  • Support and resistance trendlines near an apex.

Q4 2019 Gold Forecast and Top Trading Opportunities

Chinese Growth Hits a 26-year Low in Q3, Gold Stable for Now

Gold is getting a mild lift from recently released Chinese data that showed below expectation third-quarter GDP of 6%, its lowest quarterly growthrate since 1993. The ongoing US-China trade war continues to weigh on the world’s second-largest economy, hitting risk sentiment, despite the positive words from both sides after their recent trade talks.

The US dollar remains at, or very close to, its lowest level since mid-August, adding substance to gold’s bid, although the greenback is trading in heavily oversold territory and is currently supported by the 200-day moving average.

US Dollar Price Daily Chart (December 2018 – October 18, 2019)

Gold Price Nears Breakout as Trendlines Continue to Merge

Gold has moved in a narrow trading range over the last week and is being kept in check by a symmetrical triangle formation. The support and resistance trendlines are nearing an apex, signaling a breakout in the short-term. The formation would normally suggest a break higher, but the set-up is being clouded by the 20-day moving average which has acted as resistance this week. To rally, gold will need to break and close above the 20-dma and the current resistance trendline and 50-dma at $1,507/oz. Above here, two recent highs at $1,517/oz. and $1,519.5/oz need to be cleared to leave the way open for a re-test of the September 24 high at $1,535.8/oz.

Gold Price Daily Chart (February – October 18, 2019)

Gold Price Nears Breakout as Trendlines Continue to Merge

IG Client Sentiment data show that 69.0% of retail traders are net-long of gold, a bearish contrarian indicator. However, daily and weekly sentiment shifts give us a mixed outlook for gold.

How to Trade Gold: Top Gold Trading Strategies and Tips

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on Gold – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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