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Test of Resistance May be Complete
Since today’s high was marked by two indicators, it might be the top for the counter-trend rally. It is also a five-day high. Short-term strength was seen in today’s advance as the 20-Day MA was reclaimed and the day’s session looks likely to close above the 20-Day line, which is at $2,903. Nonetheless, the larger bull trend breakdown pattern remains dominant.
Although gold could continue to rise and test higher dynamic resistance levels indicated by the trendline, unless there is a daily close above the trendline or a rally above the record high, it looks more likely to continue the bearish correction. However, that might not happen immediately.
Possible Inside Week This Week
Given last week’s relatively wide trading range, this week’s price range could complete the week contained within last week’s range. That would set up an inside week for next week. Therefore, in the daily time frame this week could see consolidation above last week’s low of $ 2,833 and below today’s high. Near-term support is at today’s low of $2,882 and yesterday’s low of $2,855.
50-Day Support is Key
The 50-Day MA, now at $2,781, is a key potential support level during a bearish correction. Notice that the line continues to rise and is close to converging with the prior trend high at $2,790. There has not yet been a test of support for the 50-Day line since it was reclaimed in early January. Therefore, it should indicate support if reached during the current bearish retracement.
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