Market Analysis: Gold Bulls Short-Term with the Momentum On Their Side

October 22, 2018 09:54

As one can see in the economic calendar below, the economic docket is quite thin on the first day of trading in week 43 of 2018. The main drivers can currently be found around Italy and the rising tensions between Rome and Brussels, in regards to the Italian budget for 2019.

Source: Economic Events 22nd of October 2018 - Admiral Markets' Forex Calendar

As we could see on Thursday, a direct confrontation between the populist government in Rome and the EU can quickly result in at least a short-term risk off mode in all financial markets, a move which could be connected in the past to market participants buying safe haven assets like Gold. That was also pointed out by ECB (European Central Bank) president Draghi who said that that countries questioning the European Union's budget rules could damage growth and financial conditions, in a summit on eurozone integration, where he quite obviously referred to Italy.

Technically, Gold bulls find themselves in a sweet spot after the biggest daily gain on 11 October after BREXIT occurred back in 2016. On an hourly chart one can clearly see a sequence of higher highs and lows since the 8 October, waiting for another push higher after the consolidation last week. When taking a closer look, Gold seems to form a rising wedge (purple), usually considered to be a bullish continuation pattern in an uptrend. If the rising wedges really plays out , the projected target could be found around 1,250 USD, falling into the region of the weekly pivot point "R2":

Source: Admiral Markets MT5 with MT5SE Add-on - Accessed: 20.10.2018, 15:00 CEST

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

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