A trend continuation, or the start of a trading range and reversal?

Published On: 5 October 2020
Jeraldine Tan, Senior Dealer

  • Gold has been in an uptrend since the start of the year. Being the safe haven commodity, it was relatively unaffected during and after the Covid-19 crash in March-April.
  • Peaking in August, Gold is now forming a flag/wedge pattern probably due to profit taking and more risk deployed into tech and equities in general. With such a strong trend on its back, it is more likely going to continue its rally – at least back to test the Aug20 high.
  • However, when the wedge pattern drags on for too long, it also points to the bulls not having enough momentum and the market will return to a 50:50 probability up or down. At this point, traders can opt for a breakout strategy to capture either a trend continuation, or the start of a trading range and reversal.

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