Hawaii Six O - Gary Wagner
Gold pricing consolidates above the 200-day moving average
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As of 4:55 PM EDT gold futures basis, the most active August 2022 contract is fixed at $1854.40 which is a net gain of $10.70 or 0.58%. In fact, over the last 13 trading days, gold prices have remained and closed above a key technical study that indicates whether or not a stock or commodity is in a long-term bullish or bearish trend; the 200-day moving average. Currently, this key indicator is fixed at $1841.70. At the same time, it must be noted that gold has been trading in a narrow and defined trading range between $1821 and $1875 for over two weeks now.
When viewing gold prices through a Japanese candlestick chart traders focus on the "real body" which is a rectangle drawn between the open and closing prices. In a daily Japanese candlestick chart, the real body represents the open and closing prices for the trading day. The daily high and low are referred to as wicks and do not warrant the same attention as the real body.
Japanese candlestick theory believes that the most important component of a daily candlestick is the relationship between its opening and closing price. They view each trading day as a battle and the outcome of that battle is viewed through the real body of a candlestick to determine whether or not the bullish or bearish faction was able to dominate price action.
Therefore, the fact that over the last 12 consecutive trading days the real body on the daily Japanese candlestick has been above the 200-day moving average is significant. It indicates that a base has been forming at current pricing and although there have been four instances in which the lower wick has occurred below $1841.70 is not as important as the fact that the real body of the candlestick has remained above this moving average.
This puts the first level of technical support at $1840. The first level of technical resistance occurs at $1870 which corresponds to the closing price on Thursday, June 2, and the opening price on Friday, June 3. Major resistance occurs between $1889 and $1891 as these two price points represent the 50 and 100-day moving averages.
It is also important to note that gold prices have remained fairly stable defined by the $50 differential between recent daily highs and lows considering the recent dollar strength. Today’s moderate gains in gold were based upon bullish market sentiment as the dollar index was in essence unchanged on the day.
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Wishing you as always good trading,