FxWirePro: Yellow Metal Retraces More Than 50% Fibos After Hammer Formation – Trading and Hedging Perspectives

We have recently raised a cause of concern on Gold’s (XAUUSD) rallies in the short run upon bearish patterns, such as, gravestone doji and hanging man that have occurred at $1,527.05 and $1,552.14 levels. As a result, these bearish patterns have hampered the prospects of 6-1/2 years highs, while the major uptrend extends 6-year highs.

On a broader perspective, bulls break-out stiff resistances and major trend retraces more than 50% Fibonacci levels from the December’2015 lows of $1,046.23 as hammer counters at the double top neckline. 

The current prices, on this timeframe, spike off well above EMAs, while both leading oscillators substantiate (refer monthly chart). 

Both RSI and Stochastic curves show the upward convergence to the robust uptrend that signal intensified bullish momentum.

To substantiate this buying stance, the uptrend is likely to prolong on the bullish EMA & MACD crossovers.

Well, contemplating all the above technical rationale, on trading grounds, at spot reference: $1,517.95 levels, one can think of trading one touch call options spread with upper strikes of $1,531 levels.

Alternatively, on hedging grounds, we advocated long positions in September’19 month’s CME gold contracts. We now like to uphold the same strategy by rolling over the contracts for November delivery as we could foresee more upside risks amid global financial crisis. Buying interests are mounting on safe-haven sentiments amid global slowdown which is still imminent.