Gold On Fire – Risk Off Sentiment Rolling the Market
Arslan Butt • 2 min read
The market was trading calmly until the North Korea put it on firing a missile early on Tuesday from near Pyongyang that flew over northern Japan, boosting war sentiments.
Risk Off Sentiment
As we already know about the cold war between North Korea and the United States. The situation got worse this morning after mounting geopolitical tensions over a new North Korean missile launch which triggered the demand for safe-haven assets.
In response, the investors around the globe converted the Risk on sentiment to Risk off by switched from riskier investments to safe and low premium investments such as Gold, Silver, and Japanese. Unfortunately, the reaction was so robust that we didn't get a chance to capture our share.
In my previous report on Gold, I discussed that Gold is likely to face resistance at $1326. As of now, gold prices have already reached below $1326 but has broken above the bullish channel.
Gold – 2 Hours Chart – Retracement
Looking at the Stochastic RSI, the gold is massively overbought at $1324, but on the hourly timeframe, it has formed a shooting star which is emphasizing that bulls are getting weaker so bears may gain control. Now if gold stays below $1326, we are likely to see a retracement until 1313 (23.6%) and $1300 (38.2%)
Gold Trading Plan
As per above analysis, I have opened a sell signal below $1326 to target $1312 with a stop loss above $1328. All we need to drag our stops at break even once our trade shows some profit. Good luck.