Gold has been enjoying a mixture of weak US$ and ‘Flight to Safety’ activity since the start of the year and there have been a number of very profitable TC LONG signals along this journey. Price action has been choppy of late as the metal struggles near some key technical resistance levels. Gold is negotiating yet another of these right now but with the US$ heading to a major support level the outcome here is not quite clear. However, there is a key threshold level to watch to help gauge the outcome here, on both Gold and the US$ index.
NB: our local area is without internet for the next two days and I am tethering off my phone but things are slow.
Gold monthly: an early alert to the bullish-reversal potential here came with the January candle close as it printed a bullish ‘Morning Star’ pattern and this was documented in an article that can be found through the following link. A second clue came with the bullish breakout from the descending wedge pattern and the article to this alert can be found here:
Gold weekly: price action broke up and out from the bullish-reversal descending wedge at the end of January but note the weekly 200 EMA and how price has not traded above this level in almost three years. This is a major resistance level for the metal to now negotiate and it currently sits at around the $1,257 level with Gold trading right at this region as I type. Any weekly close and hold above this weekly 200 EMA would be another bullish signal:
Gold daily: this had looked like the Bull Flag was about to be trumped by a bearish H&S but this did not evolve. Note how price is right at the weekly 200 EMA:
Gold 4hr: whilst there was a clear bullish trend line breakout at the end of last week momentum has been rather weak and, thus, there was no new clear-cut TC LONG signal with this breakout move. I’m not surprised though given the resistance levels that were above from both the weekly 200 EMA and the $1,250 psychological level. Any 4hr or daily close above this weekly 200 EMA would be encouraging but the real proof will be in a weekly close above this level:
US$ index weekly: US$ weakness is helping to keep Gold supported but there is a clear and potential road block in sight. The 92.50 level has been major support for the US$ for over 15 months and any continued support for the US$ would be bearish for Gold. However, any US$ break and hold below 92.50 would be bearish for the US$ and bullish for Gold. Thus, both the US$ and Gold have to negotiate key levels in coming sessions.
Summary: Gold has been bullish since the start of the year but is negotiating the next major threshold region of technical resistance from the weekly 200 EMA. This ties in with the US$ heading to major 92.50 support and so both of these levels bear watching to help determine the the next trend direction with both instruments.
- Bullish for Gold: a break and hold above the weekly 200 EMA for Gold and a break and hold below the 92.50 for the US$.
- Bearish for Gold: a respect of the weekly 200 EMA for Gold and respect of the 92.50 for the US$.
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