Gold Bounces Off an All-Time High

Commodities have gone through the roof, and that’s a fact. Some more so than others. The one that’s been most affected by Russian aggression is of course, Gold, the renowned safe haven asset. That shouldn’t be any surprise as the risk off mode is of course dominant now.

Interestingly, the spike in Gold and, as a consequence the buy signal, happened before the invasion. From a technical point of view, the buy signal was created when the price broke the upper line of the symmetric triangle pattern (blue lines). That was on February 11^th, so almost one month ago.

Since the price broke the upper line of the triangle, we’ve had an almost constant upswing. Yes, sometimes the price drops a bit to perform a very fast correction, but in general, the surge had been pretty much unstoppable. Until now…

Why now? Well, yesterday, the price of gold managed to reach the area of all-time highs (ATH). We didn’t set a new ATH but buyers managed to flirt with it a bit (orange). That was enough to trigger a small bearish correction. I agree, the place for that suited. At some point, such a horizontal surge is usually not sustainable. A bearish correction is more than welcome. So, how do you trade it? Reasonably…

A bounce off a horizontal resistance can be a good occasion to sell. Especially since we have an interesting risk to reward ratio in a sell trade here. On the other hand, the price breaking the resistance and setting a new ATH would bring us a proper, long-term buy signal.

For a look at all of today’s economic events, check out our economic calendar.