Gold’s bearish engulfing pattern engulfs consolidation phase momentarily – Trade boundaries and long hedge as major trend intact:
Technical glance: Gold ( XAUUSD price) has continued to sense selling sentiments after bearish engulfing formation at $1,337.77 levels (on 4H plotting). Consequently, bears have taken-off slumps below DMAs.
For now, previous bullish sentiments seem to be exhausted as the current price goes below 21-DMAs.
More weakness likely as both momentum signal overbought pressures and trend oscillator ( MACD ) has shown bearish crossover to indicate downtrend to prolong further.
On a broader perspective, double top on monthly plotting with consecutive shooting stars nudge price below EMAs, but the formation of hammer counters, while momentum indicators substantiate bullish sentiment on this timeframe.
Bulls ensure consolidation phase as long as the current price remains above EMAs. Both RSI and stochastic curves, also converge upwards to the upswings.
Trading tips: At spot reference: $1,313 level, on trading grounds, as Stochastic & RSI curves are indicating overbought pressures, one can trade this commodity with boundary options with upper strikes at 1,337.02 and lower strikes at 1,328 levels. The strategy is likely to fetch leveraged yields as long as the underlying price remains between above strikes on the expiration.
Alternatively, on hedging grounds, we advocated long positions in CME gold contracts for Feb’19 delivery, when the underlying was trading at $1,250/oz. We now like to uphold the same strategy by rolling over the contracts to March delivery as we could foresee more upside risks.
Currency Strength Index: FxWirePro's hourly EUR is at -57 ( bearish ), hourly USD spot index is inching towards 31 levels (mildly bullish ), while articulating at 10:23 GMT .
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