Gold has been bullish since mid-March after putting in a low around 1145. Before that from the end of January through February and into March, gold was falling from 1307. Now, gold is trading at a key resistance and how it reacts here can give us clues to what the outlook will be in the short-term.
The 4H chart shows some signs of bullish reversal against the prevailing downswing. Price is now above the cluster of 200-, 100-, and 50-period SMAs. The RSI has tagged above 70. However, we these technical developments can be signs of a sideways market, which would make gold neutral-bearish.
Now, if price clears 1225, it will h ave put in a price bottom and would open up the 1307 area. In this scenario, gold would be neutral-bullish in the 4H chart.
When we look at the daily chart, gold seems to be neutral, with a slight bearish bias from 2013 and 2014. In a neutral mode with slight bearish bias, a break above 1225 will first see a challenge at 1238-1240. A market that maintains the bearish bias would find resistance here.
On the other hand, a break above 1240 would open up 1307 and put gold back in a nentral mode in the medium-term, while bullish in the short-term. The daily chart above shows a swing projection that gives a slightly more aggressive target then 1307, maybe towards 1320-1325. This would complete an ABC pattern within the context of a neutral or bearish market.
From 1300-1325, we should look for sellers to bring price back towards at least the 1240 level, which would become the central pivot area of the sideways market since August 2014. Gold should NOT be bullish outside of the short to short-medium-term.
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