FxWirePro: Gold’s double top pattern, shooting star and bearish DMA crossover signal more slumps – Construct tunnel spreads for speculation

On daily terms, the price of yellow metal keeps dipping ever since it has formed the double top pattern, and now is on the verge of hitting 3-weeks lows.

Top 1 at 1295.46 and top 2 at 1296.06 levels.

Well, on the weekly terms, the major trend still non-directional after shooting star and doji formations.

Gold price behavior has been moving in rising trendline with the triple top formation (refer daily charts).

Top 1 at 1263.87, top 2 at 1295.46 and top 3 at 1294.91 levels.

Failure swings at stiff resistance have evidenced slumps below DMAs. Currently, heading towards 5-weeks’ lows at 1240.71 levels (just 9 dollars away from current levels).

For now, the bearish DMA crossover likely to evidence more slumps on intensified momentum.

The current prices are well above DMAs amid today’s mild downswings for the day, but slumps seem to be most likely upon bearish DMA crossover.

RSI shows downward convergence to the price dips that indicates the strength in bearish trend and stochastic curves have reached oversold territory but still signaling selling pressures.

While on a broader perspective, the bulls in gold prices in consolidation phase is hampered by shooting star and doji candles occurrences that signal weakness again.

Both leading oscillators on this timeframe (RSI & stochastic) have been indecisive but mildly bearish bias.

MACD on daily terms indicates price dips to prolong further, while on monthly timeframe has been the little skeptic about the trend direction.

Trade tips:

On intraday trading perspective, we see upside barrier at 1255 and on southwards at 1244 levels, accordingly we advocate trade in tunnel options spreads to fetch the leverage yields. Using such speculative leveraged instruments the returns will have magnified effects than spot trades as long as underlying commodity spot prices remain between these two strikes on expiration.