Author: Mr. Amar – Technical Analyst

It’s a great week for gold prices. The yellow metal entered the month of March fuelled by fears of a Russian invasion of Ukraine. The war bid led to a strong rally, but gold failed to reach the all-time highs recorded in summer 2020. And that weekly candle in early March finally showed a powerful reversal from that failed high, with the bar closing weekly like a gravestone Doji. However, it was the following week that helped create the evening star, as this week’s price action retreated further from that previous breakout, bringing prices back to the starting point around the $1900 psychological level.

Gold (XAU/USD) turned sharply lower on Monday after failing to sustain above $1960 as progress in Russia-Ukraine peace talks boosted demand for assets seen as risky in the market. The Kremlin no longer calls for denazification, demilitarization, and protection of the Russian language in Ukraine. That being said, Ukraine could remain with aspirations to join the European Union (EU) but will have to give up NATO membership. As for this week’s economic calendar, US jobs and eurozone inflation data will be closely monitored. US nonfarm payrolls to start the new month on Friday are likely to show employment continued to rise in March after two reports in January and February had averaged +580k.

From the weekly chart, we can start to focus on that evening star formation. The demand zone of interest has some historical relevance, as you can see in the above chart. The zone from $1900 to $1923 is what ultimately caught the highs back in 2011. And it also played a role in recent price action, helping to establish support when the break started retracement two years ago and soon turned into resistance holding the late 2020 and mid-2021 highs. The same area even marked resistance towards the end of February, but as wartime tensions mounted, prices overcame this resistance and it is now serving as support, keeping the bears at bay after the evening star formation has concluded.