|
R1 |
1,666 7 DMA |
|
R2 |
1,672 DTL |
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R3 |
1,674 21 DMA |
|
R4 |
1,683 100 DMA |
|
R5 |
1,686 DTL |
|
R6 |
1,689 200 DMA |
|
R7 |
1,688 38.2% Fibo |
|
S1 |
1,657 UTL |
|
S2 |
1,656 50% Fibo |
|
S3 |
1,634 |
|
S4 |
1,648 UTL |
|
S5 |
1,624 61.8% Fibo |
|
S6 |
1,611 |
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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 negatively last night but formed a positive hammer internal hammer reversal. This morning the metal is consolidating above tentative trendline support at $1,657.
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Gold has resistance from the 7 DMA.
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The stochastics are attempting to cross higher, while the RSI is neutral.
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The BBs are converging again, suggesting a forthcoming breakout.
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Gold is testing support from the 50% Fibonacci retracement level at $1,656 from the December 2011 low to the February 29, 2012 high.
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The metal has trendline resistance at $1,686-$1,672 and trendline support at $1,630.
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Conclusion
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Given the recent overhead tail on the break higher following the long tail from the break lower, gold could be trading in a bearish symmetrical triangle formation. The top of this formation would be $1,686 and the bottom either $1,657 or $1,648.
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So we will either turn negative on a break and close below $1,655-$1,556-$1,648 (UTL/50% Fibo/UTL) and leave a turn-neutral trigger around these levels, citing $1,635-$1,630-$1,624-$1,611 as our downside targets.
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Or we could turn positive and job the metal higher if gold finds support at $1,655-$1,656 and if the stochastics turn bullish. Upside targets would be $1,666-$1,674-$1,685-$1,694. A break above $1,672 could be a good cue for a run to $1,683-$1,686-$1,687-$1,688-$1,689.
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We are therefore neutral in the short-to-medium term but expect this to change in the coming week as gold looks to break out. Confirmation of this breakout will be seen in the BBs.
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We remain neutral-positive in the long term while gold continues to trade in this large triangle formation.
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