Monday has been a quiet one for gold prices especially compared to last Friday’s sharp rally that brought the pair to 1322. As you can see in the 1H chart below, gold consolidated in a tight triangle with a low of 1306.50.
In the 1H chart, we can see that the bullish trend is intact. The moving averages are in bullish alignment, and price is holding above the 50-hour SMA. The RSI shot up above 90 but has since resolved that overbought condition. With the RSI reading holding above 50, we see that the bullish momentum is still very much in play.
A break above 1325 opens revives June’s uptrend. Some key levels above are:
1) 1331 (April high)
2) 1350-1360 (a support/resistance pivot, and likely where price will meet a falling trendline from 2013.
3) 1388.50 (2014 high)
The daily chart here does not show as strong a bullish market as the 1H chart. The moving averages are clustered together and reflect a sideways market. Simply by eyeing price action, you also see that it has been congesting in 2014, developing a triangle pattern.
The RSI shows overbought condition in the daily chart. Therefore, the bullish outlook suggested in the 1H chart should be limited first to 1331. We might need some more consolidation or correction before the market extends toward the 1350-1360 area. For example, a test of the 1280-1300 area and the ability to stay north of it, should give traders more confidence about a push toward 1350-1360.
Failure to break above 1322 and a break below 1306 would suggest a bearish correction to test that 1280-1300 area for support.
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