To Maintain Range Trading Due to the Failure of Breakthrough

Peterson

Summary:

The oscillation range during the day will be 2018-2042, and investors are advised to buy low and sell high.

SELL XAUUSD

EXP

EXPIRED

2042.00

Entry Price

2018.00

2047.00

4174.86 +51.74 +1.25%

Pips

EXPIRED

2018.00

2033.09

Exit Price

2042.00

Entry Price

2047.00

Fundamentals

During the Asian session on Monday (February 26), spot gold fluctuated in a narrow range and is currently trading around 2032.

Last week, the US manufacturing PMI grew faster than the service sector in February. It has improved for several consecutive months, indicating that US manufacturing is getting out of the doldrums. At the same time, the January inflation data once again exceeded expectations, and employment remained strong. These greatly hit rate-cut expectations, so no rate-cut is expected before June. The gold price remained resilient overall against the backdrop of rate cuts this year, though the recent data were bearish for it. Gold has been failing to break above the 2035-2040 resistance range after reaching 2034.8, and it also doesn't fall below the 2015-2020 support area, so range trading is a profitable strategy. Last Friday, there was a sign of a breakthrough as the gold price rose as high as 2041 and fell as low as 2015. But it again failed to make a breakthrough and kept swinging around 2023.

As we have emphasized before, if gold cannot effectively break through the resistance in the 2035-2040 area at the beginning of the week, it will probably turn from bullish to bearish. Support is initially in the 2015-2020 area. For further support, traders should look at the range of 1995-2000.

Yesterday gold prices rebounded in a V-shape, falling as low as 2015. After rebounding to 2041, gold prices retreated slightly to 2035 in late trading. Our strategy was to trade in the range of 2015-2040. If investors have taken long positions at lows around 2015, they can make a lot of profits. In addition, traders who went short around 2040 can also gain some profits.

Data: The US Markit manufacturing PMI unexpectedly hit a 17-month high of 51.5 in February, compared with an expectation of 50.5. The service PMI hit a three-month low of 51.3, compared with the expected 52. US home sales data was also higher than expected, with the total number of existing home sales in January coming in at an annualized 4 million units, higher than expectations of 3.97 million and the previous 3.78 million.

Today, investors need to pay attention to the US new home sales in January, especially the January PCE data to be released during the week.

Technical Analysis

Gold prices tried to break through the previous oscillation area on Friday, but finally it failed. After falling as low as 2015, spot gold quickly rebounded to 2041 before retracing to fluctuate around 2035. Under the traction of the trend line in the chart below, it is difficult for gold prices to plummet. However, it's also difficult for the price to break through the trend line as the resistance is also solid. Last week, gold prices generally fluctuated in the range but were stronger on Friday. After the consecutive Doji Stars in the first two days, Spot Gold finally closed higher with a long lower shadow, indicating that the price is more resilient in the short term, or the bulls have the advantage. However, if it fails to break through quickly, the bulls may lose patience as a result, which will increase the probability of a correction in gold prices.

Last Friday, the volatility of gold prices increased again. Although the bulls have a clear upward move, they fail to break through the 2035-2040 zone effectively. Traders need to pay further attention to the resistance in this area as well as the breakouts. If gold comes under pressure again, we have to consider a pullback. Judging from the 1-hour candlestick chart, gold prices continued to pull back after a bearish breakout, and the MACD indicator has also seen a death cross. Therefore, perhaps there will be an hourly pullback during the day. Support is still in the range of 2015-2020. If there is a deep decline and stabilization during the day, traders can try to go long with small positions. Today, aggressive traders can buy low and sell high in the 2018-2042 range. To Maintain Range Trading Due to the Failure of Breakthrough_1

To Maintain Range Trading Due to the Failure of Breakthrough_1

Trading Recommendations

Trading Direction: Short

Entry Price: 2042

Target Price: 2018

Stop Loss: 2047

Support: 2010.000/2000.000

Resistance: 2030.000/2040.000

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