Daily and Weekly Candlesticks Indicate Potential Support

May 3, 2019 - 7:13pm

 by Gary Wagner

Although gold pricing closed higher on the day and above yesterday’s open, prices still declined for the week. However, one key element in the trading range created this week was the low. Gold futures traded to a low of approximately $1267 per ounce, which matches within a few dollars to last week’s lows. This is significant in that it shows the potential for that price point to be a major area of support.

These equal lows can be seen best on a weekly gold chart which uses Monday’s open and Friday’s close as the two points creating the body of the candlestick, and the highest and lowest trading points of the week to create the upper and lower wicks.

The price point of $1267 also matches up with the 50% Fibonacci retracement level. This retracement has a data set which begins on November 11th, 2018 when gold hit a low of $1196, and ends in mid-February when gold reached this year’s apex of $1350 per ounce.

When price action is viewed from a daily candlestick chart, we can identify a very simple two-day pattern known as an “engulfing bullish”. This pattern indicates a potential bottom if it occurs after defined downtrend, with the lowest trading point occurring as a red candle, (which simply means that closing price occurs below the opening price). On the following day the green candle “engulfs” or covers the entire body of the red candle proceeding it. In other words, the trading range between the open and close extends above the open and below close of the day before. Of the two-day reversal patterns this is one of the stronger indicators in terms of a potential bottom.

    

However, because this candlestick pattern is composed from only two trading days a confirming candle is required to take the signal. Confirmation for this pattern would be shown when and if Monday’s candle contained a higher low and a higher high than the previous candle, and at the same time is a green candle meaning the closing price is above the opening price of that particular candl

Wishing you, as always, good trading,

Gary S. Wagner - Executive Producer

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Gold Forecast: Proper Action

We are currently neutral with no active trades in gold or silver. However indications on both the daily and weekly candlestick charts are that there is a real probability that we might see gold and silver trade higher next week.

Both today's report as well as the Market Forecast will go into more detail about this assumption. If we do get follow-through buying at the beginning of the week it would trigger a buy signal. In that case we would send out a special trade alert to that effect.

Gold Market Forecast

The fact of the matter is that ever since gold pricing hit this year's apex at $1350 per troy ounce, pricing has been under pressure trading to a series of lower lows as well as lower highs.

However today's video report will detail why there is the real potential that the last two weeks resulted in a base and support level being found in gold. Watch today's report for a more detailed analysis.

Sentiment Indicator:
Gold -> Neutral
Silver -> Neutral
S&P 500 -> Bullish
Bitcoin -> Bullish