A technical look at the gold market at the beginning of the week March 16

Last week was extremely bearish. According to the Moscow exchange, the price of gold fell from 1680 per ounce on the week to 1540 by Friday evening, March 13. The beginning of the current week does not project anything good for the bulls, because the price during the first half of Monday has already dropped below 1460.

Is there any hope for the recovering of the gold market?

From a technical point of view, the price is in the middle of the long-term channel uptrend. The expectation of support is quite rational.

However, what is alarming – “bearish engulfing” in the recent background.

Analyze the behavior of the market during the week of March 2 (marked by the vertical green line). It was increasing in price with a maximum trading volume. If all this extreme activity represented the efforts of buyers, why is the closing so far away from the highs? Moreover, why next week from March 10 (highlighted by the vertical red line) did fully erase all progress of buyers from the previous week?

Therefore, more rational is the next version. Huge volume during the week of March 2 is fixing profits from long positions after a major uptrend. Professional investors have used situational highs amid news about the coronavirus to close long positions. From this point of view, the decline in the week from March 10 looks more natural.

What’s next?

Even if we assume that the Central line of the upward channel will play as support, we can not be so positive to expect a complete reversal. Given the area of weakness above 1600, the probability of a rebound will be purely technical in nature. The long-term uptrend in gold prices is under threat.


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