Gold has been steadily trending up since its early November low. The Swiss gold vote was expected so it was no surprise to see price turn back up after the initial dip in price. I still believe gold is on the cusp of a much greater rally so let’s see where things currently stand.
GOLD DAILY CHART
We can see a pattern of higher highs and higher lows indicating a bull trend. It is only the daily chart so nothing to get too carried away with but big things start with small things.
The Bollinger Bands show price trading well outside the lower band after the Swiss gold vote. This behaviour is consistent with solid lows. Price then traded up to the upper band but has since retreated and now looks to have the lower band in its sights once again. Another low outside of the lower band would look good for the bulls.
I have added Fibonacci retracement levels of the move up from November low. Looking retroactively the low after the Swiss gold vote was right around the 88.6% level. I favour this next low to be around the 76.4% level at US$1157.
The Relative Strength Indicator (RSI) and Stochastic indicator are both back around oversold levels so perhaps a low is not too far away.
GOLD WEEKLY CHART
The RSI is showing a pattern of higher highs and higher lows indicating strength is building while the Stochastic indicator is trending up and looking bullish.
Price is currently milling around the previous triple bottom level. I expect price to dip back under this level one last time before the rally higher really kicks into gear.
The Parabolic Stop and Reverse (PSAR) indicator now has a bullish bias after price busted the dots to the upside last week. As often happens after this event price then comes back down to test the support. The dots currently stand at US$1137 and breaking that support now would look bearish in my opinion.
I expect the current move down to extend into next week and providing it holds support the next target will be trading back up and busting above the previous swing high level which stems from the October high at US$1254.
Breaking to new lows now below US$1132 would be very bearish but I doubt that scenario.
So, the rally still looks to be building its foundations which should provide the springboard for a much larger rally in the very near future.
General Risk Warning for stocks, cryptocurrencies, ETP, FX & CFD Trading. Investment assets are leveraged products. Trading related to foreign exchange, commodities, financial indices, stocks, ETP, cryptocurrencies, and other underlying variables carry a high level of risk and can result in the loss of all of your investment. As such, variable investments may not be appropriate for all investors. You should not invest money that you cannot afford to lose. Before deciding to trade, you should become aware of all the risks associated with trading, and seek advice from an independent and suitably licensed financial advisor. Under no circumstances shall Witbrew LLC and associates have any liability to any person or entity for (a) any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to investment trading or (b) any direct, indirect, special, consequential or incidental damages whatsoever.
Recommended Content
Editors’ Picks
EUR/USD rebounds to 1.0650 on renewed USD weakness
EUR/USD gained traction and rose to the 1.0650 area in the early American session on Tuesday. Disappointing housing data from the US seem to be weighing on the US Dollar, helping the pair stretch higher.
GBP/USD climbs above 1.2450 after US data
GBP/USD extended its recovery from the multi-month low it touched near 1.2400 and turned positive on the day above 1.2450. The modest selling pressure surrounding the US Dollar after dismal housing data supports the pair's rebound.
Gold retreats to $2,370 as US yields push higher
Gold stages a correction on Tuesday and fluctuates in negative territory near $2,370 following Monday's upsurge. The benchmark 10-year US Treasury bond yield continues to push higher above 4.6% and makes it difficult for XAU/USD to gain traction.
XRP struggles below $0.50 resistance as SEC vs. Ripple lawsuit likely to enter final pretrial conference
XRP is struggling with resistance at $0.50 as Ripple and the US Securities and Exchange Commission (SEC) are gearing up for the final pretrial conference on Tuesday at a New York court.
US outperformance continues
The economic divergence between the US and the rest of the world has become increasingly pronounced. The latest US inflation prints highlight that underlying inflation pressures seemingly remain stickier than in most other parts of the world supported by a strong US labour market.