The Previous Resistance Turns Into Support for Gold
Safe havens are on a bullish roll. They have been attracting really strong bids from traders as they diverge from risk assets and instead, pile on into safe haven assets. As a result, USD/JPY broke below 105 for the first time this year today after opening with a bearish gap, while GOLD opened with a bullish gap higher.
Gold has been on a bullish trend for a long time now and the 50 SMA (yellow) was providing support two weeks ago, while last week it was the 100 SMA (green) which was providing support. Gold bounced off the 100 SMA at the end of last week as the sentiment deteriorated again.
Today, the bullish gap took Gold above the previous high which stood at $1,530s, taking us to $1,555. The sentiment improved somewhat during the European session as Trump softened the tones on China today and Gold retreated lower. But, the previous support zone at $1,520-30 turned into support and it has ben holding during the European session.
The price formed a small hammer candlestick in the previous period on this time-frame which is a reversing signal, so we might see Gold bounce off this previous resistance zone which seems to have turned into support now. This might be a good chance to go long on Gold, but stochastic is still heading down so we will wait a bit longer.
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