Stochastic indicator provides buy signal
The six-month chart of the price of gold (in USD) ha been showing a steady rise since June, which has resulted in an increase in value of around 15%. Since the beginning of September, a classic chart flag formation (blue) has formed with a vertical extension of around USD 150. If a breakout above the upper flag line is successful, a technical price target will emerge that corresponds to the vertical extent of the flag – plotted at the breakout point – which would be the USD 2750-2800 range. In the event of a downward breakout, the next support level would be 2600, which is also the upper black trend line. Below this, the 2500 would offer support – the second black trend line and the 100-day line run here. The 2500 is also an important round mark.
Both average lines are clearly and steadily moving upwards. This positive picture is complemented by the fact that the 100-day line has been clearly above the 200-day line for a long time.
A sell-signal was given by the MACD indicator a week ago (the blue line crosses the red line downwards), whereas a buy-signal was generated by the stochastic indicator since yesterday (blue crosses red upwards). The trend confirming indicator has been running above the neutral 100 in positive territory with a slight wave movement since July. For one day during the large white candle in the first third of September, the overbought/oversold indicator moved above the 2.0 level and thus into the overbought zone. A few days ago, it fell to the six-month low (as at the end of April) and is now in moderate positive territory above 0.5.
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Source: Comdirect
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