Gold Standstill – Bearish Butterfly Pattern Plays

Posted Thursday, October 11, 2018 by
Arslan Butt • 1 min read

GOLD prices inched down as robust US numbers potentially boosted the chances of multiple US interest rate hikes over the next year. However, the precious metal is still supported above $1,191 due to a steep fall in the US indices. For your info, there’s a strong negative correlation between the gold and stock markets.

Despite the steep fall in stock markets, the yellow metal hasn’t soared with the same intensity. It’s mainly because of the US producer prices, which rose in September after declining the previous month, adding to a hawkish outlook on the FED’s interest rates.

Technically, GOLD has formed a bearish butterfly pattern with a C to D wave completing at $1,195. Now, the same level is likely to work as a strong resistance. On the lower side, $1,191 is a crucial trading level. The bearish breakout can lead gold prices towards $1,187 and $1,184.

The leading indicator RSI is still holding in a buying zone and the lagging indicators 20 & 50 periods EMA are also suggesting the bullish bias of traders.

Gold – XAU/USD-Trade Plan

So, the idea is to stay bullish above $1,191 with an immediate target of $1,195 and $1,197 afterward.

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About the author

Arslan Butt is our Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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