XAU/USD: gold reached local highs

October 19, 2015

Current trend

Last week the price of gold significantly grew. The pair remains under pressure amid concerns on the markets that the Fed will refrain from an interest rate increase before the end of the year.

At the same time, the pair was supported by strong US data on the Initial Jobless Claims and Reuters/Michigan Consumer Sentiment Index for October. In addition, the USD found support after Fed’s William Dudley statement that there is a possibility the rate could be increased during this year.

Support and resistance

Bollinger Bands on the daily chart is growing, while the price range is narrowing from the bottom. MACD is turning down and giving a sell signal. Stochastic has left the overbought zone with a strong sell signal.

The indicators recommend short positions.

Support levels: 1169.81, 1166.20, 1156.40, 1153.46 (13 October lows), 1148.43, 1141.60, 1136.37 (8 October low).

Resistance levels: 1174.70 (local high), 1181.44, 1186.50, 1191.21 (15 October high), 1194.20.

Trading tips

Pending buy orders can be placed form the level of 1178.00 with targets at 1186.50, 1191.21 and stop-loss at 1172.00. Validity – 1-3 days.

Short positions can be opened after the breakdown of the level of 1171.40 with the target at 1156.40 and stop-loss at 1176.00. Validity – 1-3 days.

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