Gold Price Analysis: Well-defined battle lines point to range play around $1800 – Confluence Detector

Gold nurses losses around the $1800 following Thursday’s good two-way businesses. The risk-off theme amid coronavirus concerns continues to bode well for the US dollar. Therefore, let's take a look at how the yellow metal is positioned from a technical perspective.  

The Technical Confluences Indicator shows that the buyers remain hopeful as long as the bright metal holds above the powerful support aligned at $1795, which the confluence of the pivot point one-day S1, SMA5 one-day and SMA100 one-hour.

The next downside target is seen around $1790, the intersection of the previous high and pivot point one-week R1.

Selling pressure will accelerate below the latter, opening floors for a test of the critical demand area at $1787. That level is the previous month high.  

Alternatively, the immediate upside could be capped by a minor hurdle placed at $1804, where the Fibonacci 38.2% one-day, SMA10 1H and SMA50 15-minutes meet.

For the bulls to revive the recent upbeat momentum, strong resistance at around $1806 needs to be taken out. The pivot point one-week R2, SMA5 four-hour and SMA50 one-hour form a cluster around that figure.

Here is how it looks on the tool

Confluence Detector

The Confluence Detector finds exciting opportunities using Technical Confluences. The TC is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. Knowing where these congestion points are located is very useful for the trader, and can be used as a basis for different strategies.

This tool assigns a certain amount of “weight” to each indicator, and this “weight” can influence adjacents price levels. These weightings mean that one price level without any indicator or moving average but under the influence of two “strongly weighted” levels accumulate more resistance than their neighbors. In these cases, the tool signals resistance in apparently empty areas.

Learn more about Technical Confluence