Gold has been shining in 2015 so far but has stalled since last week. Let’s take a look at the 4H and Daily charts for its latest technical conditions.
Bullish so Far in 2015: The 4H gold chart shows a rally from roughly 1168 to 1307.This rally was persistent as the moving averages have turned up and are in bullish alignment. The fact price has been holding above all 3 (200-, 100-, and 50-period SMAs), is a reflection of a persistent uptrend. Also the RSI has been holding above 40 and tagging above 70, another sign of persistent bullish momentum.
Double Top: Now, last week, price started to find resistance just above 1300, around 1305 and 1307. Essentially, the market has formed a double bottom entering this week. However, let’s not jump to the bearish outlook just yet. Gold is now trading at a key support area around 1275-1280 and has a potential bullish continuation attempt if the support factors come into play.
The 4H chart shows these support factors:
1) a rising trendline
2) the 50-period SMA
3) A previous common price area (1/16-1/19)
4) The 4H RSI rebounding at 40. (shows maintenance of the prevailing bullish momentum)
Bullish Outlook: This shows that if price can hold above 1275, the prevailing bullish bias and momentum in 2015 would still be in play, and the pressure would be back to the 1300, 1307 highs.
Bearish Outlook: A break below 1270 would be a strong sign of the market topping. If a subsequent pullback fails to climb back above 1290, the bearish outlook would be more clear, exposing at least the 1220-1225 area (200-period SMA and a previous support/resistance pivot area).
Conservative/Aggressive Targets and Support Levels for the Bearish Outlook:
In the daily chart, we can see that a more conservative target around 1240-1255. The support factors here are:
1) a couple of resistance pivots,
2) the 38.2% fibonacci retracement level,
3) and the 200-day SMA.
A more aggressive bearish outlook would have to be limited to 1195-1200, which involves:
1) a psychological level,
2) the 61.8% retracement level,
3) and where a rising trendline from Nov, 2014-low of 1130 should challenge the bearish attempt.
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