After a softer day for the U.S. Dollar yesterday we saw risk-off assets catch a bid, one of those being gold.
Since February highs at 1346.74, we have seen the safe haven asset sell off and make lower highs, which have formed the declining trendline (seen by the black dashed line). However, in recent days with the U.S. Dollar softening, Gold has found some support on the $1280 handle and trade higher.
Looking at the hourly chart at the moment it looks like we are finding some support on the daily pivot level at $1297.61, and we have just pushed through the shorter-term resistance of the previous high that coincides with the daily R1 pivot level at £1303.66 as the U.S. Dollar continues to soften into the afternoon.
Something to be wary of is that of the potential head & shoulders formation that can be seen on the 4-hour or Daily chart for Gold. If we see Gold soften & the U.S. Dollar strengthens alongside the pair failing to push higher through the declining trendline and make a new high, then we could see it break the neckline of the head & shoulders as well as the 1280 support and trade lower.
For the time being this remains purely on the watchlist as we wait for something to catalyse a move out of the safe-haven asset and give us a direction, but we remain primed with both bullish & bearish setups.
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By Alex Simcock
This article is written by a GO Markets Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk.
Sources: Go Markets, Tradingview