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Relatively Quick Recovery
Although gold fell below potential trend support represented by both the trendline and 20-Day MA on Monday, the quick recovery shows the bulls back in charge and the integrity of the short-uptrend intact. A daily close above the 20-Day MA will confirm strength indicated by today’s bullish reversal. Monday’s corrective low of $2,956 established a higher swing low and completed a 61.8% Fibonacci retracement of an internal upswing and a successful test of support near prior resistance that marked the most recent bullish breakout at $2,956.
In addition to finding support around two key price levels, the 50-Day MA was slightly below that price area as well. The 50-Day line continues to rise and has reached $2,953 currently. The 50-Day MA now represents a key trend support area moving forward.
Rally Follows Minor Pullback
Gold’s sharp advance following a relatively minor retracement is bullish but needs further signs of strength to indicate whether it can continue to rise in the near-term. Certainly, a minor pullback may occur before an attempt is made to challenge the recent new record high of $3,168. Potential support levels to watch include the 20-Day MA, Tuesday’s high of $3,023, and the uptrend line. Once today’s advance is further established, the rising trendline will move to this week’s low.
First Upside Target at $3,177
If the record high is approached there is a top trend channel line (blue) slightly above the level and a short-term rising ABCD target a little higher at $3,177. That channel line represented resistance recently and it may do so again. Further up is the confluence of two indicators at $3,199.
For a look at all of today’s economic events, check out our economic calendar.
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