Gold eyes crucial breakpoint after fast rally [Video]
|Gold ticked to a fresh 2-month high of 1,821 on Monday following the speedy recovery during the past two trading days, which boosted the price by a whopping 2.7% but it was still not enough to reach the crucial resistance of 1.833. Note this is where the 38.2% Fibonacci retracement of the 2,079 – 1,676 downfall is also positioned.
The momentum indicators keep feeding some optimism that the latest rally could gain extra legs in the coming sessions. Despite testing its previous limits, the RSI remains elevated above its 50 neutral mark, the MACD is positively charged above its red signal line, and the Stochastics are just entering the overbought territory, all keeping the short-term bias skewed to the upside.
Should the wall around 1,833 collapse, the bulls may face immediate suspension near the 1,845 barrier last seen in the middle of the year. A clear move above the latter could attract significant buying interest, with the price likely advancing up to 1,870, though long-term traders may not participate until the 1,900 – 1,916 ceiling cracks.
If sellers come into play, the 20- and 200-day simple moving averages (SMAs) may eliminate downside pressures around 1,790. The 23.6% Fibonacci of 1,770 proved a hard obstacle last week. Hence, any close below it could confirm additional losses, probably until the supportive trendline currently seen near the swing low of 1,758. Lower, some consolidation could develop near 1,754 before all eyes turn to September’s bottom line at 1,722.
Summarizing, gold is expected to push for more gains in the short-term, though whether it will clearly exit its three-month-old range area above 1,833 remains to be seen.
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