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Signs of Solid Support
The price area around this week’s low is marked by several indicators showing that it may have some significance. The bottom line of a rising trend channel is close to the low and aligns with the lower line of a shorter falling channel. In addition, support was successfully tested around the 50-Day MA, now at $3,162. Also, a descending ABCD pattern reached its 100% target nearby at $3,140. Since the lower rising trendline and 50-Day MA mark dynamic support for the rising trend, a bullish reversal from those price areas indicates that the trend remains intact and can be anticipated to continue unless negated by bearish reversal signs.
Above Friday’s $3,252 is Bullish
A rally above today’s high of $3,252 will be a sign of strength and indicate that gold may be ready to test higher price levels as resistance. Since the lower end of a declining trend channel was reached this week, there is the potential for an eventual rally to the top declining trendline of the channel. However, first there is the 20-Day MA that marks potential resistance. It needs to be reclaimed before higher prices are possible. The 20-Day line is currently at $3,302.
Drop Below this Week’s Low of $3,121 is Bearish
Regardless of the potential for support to be retained at this week’s low, a drop below $3,121 could start to change that. A sustained decline below $3,121 would show the beginning of a possible failure of the near-term bull trend (from September swing low). Certainly, given the recent sharp advance in gold to new record highs a correction and possible consolidation would be appropriate before it is ready to move higher. As of now, it looks like consolidation would be contained within the falling channel.
For a look at all of today’s economic events, check out our economic calendar.
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