Gold Technicals – 1,330 Breached as Rally Continues

Hourly Chart

Gold prices continue to rally strongly, extending yesterday’s opening gap. However, prices collapsed back towards the 1,330 resistance turned support during Asian trading, after stalling just under 1,340 during late US trading hours. This decline is not surprising, as it is long overdue, with price not having any pull backs since the rally back in 18th July. Nonetheless, it will be highly generous to label current pullback as “significant”, with price trading less than 10 USD an ounce lower, with 1,330 support and the rising trendline still holding firmly. Stochastic readings shows that current bearish momentum is not yet Oversold, but readings are already pointing higher, hinting that price may have a higher likelihood of bouncing higher from the 1,330/Rising Trendline confluence rather than breaking it.

Should price ignore all the above technical signs and break lower, the immediate bearish target would be the consolidation zone between 1,310 – 1,320, which is also around the lower rising Trendline currently. A break of 1,310 will likely break the trendline, allowing for the possibility of bearish acceleration towards 1,295 and potentially beyond if bearish momentum is indeed strong enough. However, given the fact that current mid-term momentum is bullish, and short-term momentum may be oversold fairly soon, it will be a monumental effort to break into sub 1,300 zone based on a pullback alone. Hence do not simply expect a one way bearish acceleration towards 1,300

In terms of top side targets, price may find resistances from 1,370 – 1,420. Technically, the consolidation zone stretches from 1,340 – 1,420, but it shouldn’t be a tall order for the weaker point of reference to be broken considering that prices have breached the stronger 1,330 level and that fundamental factors favor a strong bullish swing right now (Hedge Funds buying Gold in huge amount). As such, if bulls fail at 1,340, this will be a strong warning sign that a stronger pullback/long-term capitulation may occur.

More Links:
AUD/USD – Moves Through 0.92 with the Resistance at 0.93 Looming Large
EUR/USD – Pushes Towards Resistance at 1.32
GBP/USD – Moves Strongly Through 1.53 to Three Week High

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.