Gold prices are showing signs of stabilization following a recent correction, according to Jateen Trivedi, Vice President of Research at LKP Securities. Currently trading around ₹1,35,690 on the Multi Commodity Exchange (MCX), gold futures indicate a potential for a buy-on-dips strategy as the market consolidates. Technical indicators suggest that the downside risk is limited, and traders are advised to consider entering positions near ₹1,36,000 while maintaining a defined risk strategy.
Current Market Overview
Gold futures have recently experienced a phase of consolidation, with prices hovering near ₹1,35,690. This stability comes after a corrective period, and early signs suggest that the market is beginning to stabilize. The price action indicates a base formation above key intraday support levels, which is encouraging for investors looking to enter the market. The sentiment among traders is shifting towards a bullish outlook, particularly as the market shows resilience against selling pressure.
Technical indicators are also supporting this positive sentiment. The price is currently trading close to a short-term exponential moving average (EMA) cluster, with the EMA 8 showing upward movement. This shift could signal an improvement in short-term momentum, suggesting that a trend reversal may be on the horizon if prices can sustain above ₹1,36,000. As the market stabilizes, traders are encouraged to adopt a buy-on-dips approach, particularly near the ₹1,36,000 mark.
Technical Analysis
The technical setup for gold is becoming increasingly favorable. The price is consolidating near the mid-Bollinger band, having successfully defended the lower band. This structure indicates that selling pressure is easing, and a potential move towards the upper band could occur if buying interest emerges above the established support levels. The Relative Strength Index (RSI) is currently positioned at 53, which is comfortably above the neutral zone, suggesting room for further upside without entering overbought territory.
Moreover, the Moving Average Convergence Divergence (MACD) is showing signs of flattening after a previous negative phase. The contraction of histogram bars indicates that bearish momentum is fading, and a positive crossover may develop if sustained buying continues. These technical indicators collectively support a bullish intraday bias, particularly if the price holds above the critical support level of ₹1,36,000.
Intraday Trading Strategy
For traders looking to capitalize on the current market conditions, a clear intraday trading strategy has been outlined. The recommended approach is to buy on dips, with an entry level set at ₹1,36,000. A stop-loss should be maintained at ₹1,34,700 to manage risk effectively. The upside target for this trading session is projected at ₹1,38,000. This strategy is based on the bullish bias that exists above the ₹1,36,000 level, while any weakness below ₹1,34,700 could signal a shift in market sentiment.
Overall, the current market dynamics suggest that traders should remain vigilant and ready to act on potential buying opportunities. The combination of technical indicators and market sentiment points towards a favorable environment for gold trading in the near term.
Conclusion
In summary, gold prices are showing signs of stabilization after a corrective phase, supported by favorable technical indicators. Traders are encouraged to consider initiating long positions near ₹1,36,000, with a strict stop-loss at ₹1,34,700 and a target of ₹1,38,000. As the market continues to evolve, maintaining a disciplined approach will be crucial for navigating the current trading landscape.
Digihunt is not a financial advisor and this is not investment advice.