Gold Facing the 100 SMA After Bouncing off the 200 SMA

GOLD has been quite uncertain lately. During summer, we saw Gold surge higher, climbing around $280 due to heightened uncertainty in financial markets, which came as a result of the escalating trade war and a weakening global economy. That hurt the sentiment in financial markets and Gold surged higher as the ultimate safe haven.

So, Gold tends to rally when there’s uncertainty in markets. But, when things become more clear, the uncertainty in Gold increases. So, Gold has been pretty uncertain in the last two months, after the climb in summer. It has moved up and down during this time and towards the end of last week, we saw Gold declining as the sentiment improved after positive comments of Brexit and on the China-US trade negotiations.

But, Gold formed a doji candlestick above the 200 SMA (purple), which rejected the sellers. The price bounced off that moving average in the US session that day and this week it has climbed higher. But, it has failed to push above the 100 MA (red) which seems to have turned into resistance now.

Gold kissed that moving average and pulled back lower just a while ago. So, we can confirm that there is some selling pressure accumulated up there. The stochastic indicator is also overbought on the H4 time-frame chart,which means that the retrace higher is complete.

This might be a good chance to go short on Gold at the 100 SMA with a stop above it, targeting the 200 SMA below. But, I will wait a bit longer to get a better entry price closer to the 100 SMA in order to minimize risk and maximize the potential profit.