|
R1 |
1,705 UTL |
|
R2 |
1,708 |
|
R3 |
1,715 |
|
R4 |
1,724 |
|
R5 |
1,726 |
|
S1 |
1,688 38.2% Fibo |
|
S2 |
1,687 200 DMA |
|
S3 |
1,686 100 DMA |
|
S4 |
1,685 21 DMA |
|
S5 |
1,674 Major 38.2% |
|
S6 |
1,656 50% Fibo |
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Legend: UTL = uptrend line
DTL = downtrend line
BB = Bollinger band
DMA = daily moving average
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Analysis
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Gold closed positively last night after hitting a new two-week high. This morning it is consolidating above DMA support.
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Gold opened above the 7 DMA, the 21 DMA, the 100 DMA and the 200 DMA this morning. It still has resistance from the 50 DMA. The 21 DMA has crossed below the 50 DMA, the 100 DMA and the 200 DMA, which is bearish.
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The stochastics are positive, while the RSI is neutral.
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The BBs are starting to converge, which suggests another breakout in the near term.
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Gold has support from 38.2% Fibonacci retracement level at $1,688 from the December 2011 low to the February 29, 2012 high. The major 38.2% Fibo from September 2011 high to the December 2011 low is also providing support.
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Conclusion
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We turned positive on the break above $1,674 and watched gold take out our initial upside targets at $1,686-$1,688.
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Today we are looking for a close above $1,686 (100 DMA)-$1,687 (200 DMA)-$1,688 38.2% Fibo. If it can, gold could run up to $1,708 (50 DMA)-$1,715.
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With this in mind, we will leave a turn-neutral trigger on a close back below $1,674. We could even turn back to a negative position on a break below this level.
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In the wider picture, the break out of the bearish down channel was positive, suggesting an end to the downward trend. But to validate this we would like a break above the prior high at $1,715. Failure to do so could signal further downside potential in the medium term.
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We are neutral in the short-to-medium and medium terms and remain neutral-positive in the long term while gold continues to trade in this large triangle formation.
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