Bullish Butterfly Setup in Gold – Get Ready for a Position
Arslan Butt • 1 min read
Cryptocurrencies remained in highlights during the Asian session, but it doesn’t mean that we can ignore gold today. There’s a potential trade setup in gold, and I’m going to share it with you all.
During the Asian session, gold prices slipped to their lowest in more than three weeks as fading worries about a global economic slowdown boosted stock indices to multi-month highs, depressing the precious metal’s safe-haven demand.
What’s Weighting on Gold?
Of course, the dollar and macroeconomic events from the Eurozone. Yeah, you head me right. The European manufacturing and inflation figures missed the forecast, causing a sell-off in the market. Ultimately boosting the demand for the US dollar, the best substitute available.
The stronger dollar makes the precious metal extra expensive for foreign investors and it becomes unaffordable. As a result, the demand for gold slows down, as do the prices.
Technical Analysis of Gold
Looking at the 4-hour chart, gold has formed a bullish butterfly pattern. The pattern initiated its C to D wave from $1,324 and is very likely to complete it around $1,281/85.
The oversold RSI is also suggesting high odds for a bullish reversal. The 200 periods moving average is left at $1,307 which is far away from the CMP (current market price).
Gold – Trade Idea
Consider staying bullish above $1,280 with a stop loss below $1,275 and take profit of around $1,295 and $1,299.