18 November 2022

Technical Analysis

Gold’s reaction on the recent Russian-Ukrainian war events

Gold against the US dollar (symbol ‘XAUUSD’) retained the bullish momentum in the last couple of weeks, with the price reaching a three-month peak on Tuesday at a price of $1,786.35. The price traded outside of the Bollinger bands at the time of the peak indicated great volatility in the market for the precious metal.

Price peaked on Tuesday after the news of a Russian missile hitting Poland, killing two people near the Ukrainian border. The Polish president announced on Wednesday that the missile was probably a stray Ukrainian defense projectile, dispelling fears that it came from Russia, which in that case could force NATO to possibly get involved in the already prolonged war, that could be devastating news for the already disrupted markets,’ said Antreas Themistokleous, market analyst in Exness.

According to technical analysis, the price resumed its overall bearish movement in the last couple of days, with the price correlating to the downside, and is currently trading around the $1,767 price area.

The price, after the sharp increase in volume that pushed it to the three-month peak, found resistance on the upper band of the Bollinger bands and is trying to push below the 78.6% of the Fibonacci retracement level. 

With the Stochastic indicator in the extreme overbought levels, it is possible to see a continuation to the downside, with a first area of support being the $1,730 area, which is just below the 61.8% of the Fibonacci, and also an inside support area since early October.

Even though there is no indication to support a further bullish movement, at least in the short-term, we might see a continued price rise before finding some resistance around the $1,800 area, which is a psychological resistance of a rounded number, the resistance area of the last peak in mid August, and also just below the 100% of the Fibonacci retracement.

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