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Gold Trapped in a Narrow Trading Range - 26 December 2014

By Alp Kocak
Alp Kocak has been trading Forex since 2003. He writes technical analysis based on Japanese candlesticks and Ichimoku Kinko Hyo.

Gold has been on the back foot since the bears defeated the bulls on the 1235/40 battlefield.

A collapse in oil prices curbed demand for the metal as an inflation hedge and a friendly risk environment encouraged investors to put their cash into higher yielding assets such as equities. Also, the weight of expected interest-rate rises from the U.S. has been negatively influencing gold prices. As a result, the market returned to the $1170 support area.

The technical outlook remains bearish while the XAU/USD pair trades below the Ichimoku clouds on almost all time frames. In addition to that, on the weekly and 4-hour charts, the Tenkan-Sen (nine-period moving average, red line) and the Kijun-Sen (twenty six-day moving average, green line) lines are negatively aligned. However, the pair held up pretty well considering the greenback continued to advance and because of that I can't rule out a rebound towards the 1186 - 1194 area where the daily could currently sits. If we climb above the Ichimoku cloud on the daily chart, then there will be a possibility that prices may retest the 1203 resistance level.

XAUUSD Week 122614

On the other hand, if the market resumes its bearish sentiment and prices drops below the 1170 support level which I have been keeping an eye on since Monday, I think we will test 1163 next. A daily close below the 1163 level would increase the downward pressure and send XAU/USD back to the 1156 (or even 1150) level. Keep in mind that thin market conditions could exacerbate price movements.

XAUUSD Daily 122614

Alp Kocak
About Alp Kocak
Alp Kocak has been trading Forex since 2003. He writes technical analysis based on Japanese candlesticks and Ichimoku Kinko Hyo.
 

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