China’s Yuan continues its slide against the Dollar, with USDCNY testing resistance at 6.70. The current retracement is likely to respect support at 6.60, offering a target of 6.80*.
* Target calculation: 6.70 + ( 6.70 – 6.60 ) = 6.80
A depreciating Yuan is likely to drive demand for gold as well as hard currencies. Rising political uncertainty — in Europe, the Middle East and the US — is expected to add fuel to the fire. Strong polling by Donald Trump alone could drive gold to its long-term target of $1550/ounce*. Expect retracement to test the new support level at $1300/ounce. Respect is likely and would signal an advance to $1400/ounce.
* Target calculation: 1300 + ( 1300 – 1050 ) = 1550
Disclosure: Our managed portfolios are heavily overweight gold stocks.
Hi Colin, I am also “long” gold. I am concerned about what appears to be a (bearish) rising wedge in the price of gold, specifically the Australian dollar price of gold, going back over the last twelve months. I am no charting expert so would like to know if you think my concern is valid. Regards.
Hi Ian,
Apologies for the delayed reply. I would view that as a trend channel more than a wedge.
Regards, Colin
…..If you draw support/resistance at $1500 and $1600 my view may be a bit clearer. There was a major Bear Trap in December 2015 followed by a strong rally which broke through weak resistance at $1600. In April 2016 it retraced to successfully test support at $1600, confirming the up-trend.
It is currently testing the next major support level at $1750. Respect would see another advance.
…. I like wedges to show more consolidation like this: http://thepatternsite.com/risewedge.html
They are, after all, consolidation patterns.
Thanks for your informative reply.