Technical Analysis – Gold bulls to stay in charge until trendline breaks

Christina Parthenidou, XM Investment Research Desk

Gold found strong footing near 1,450 and the upper surface of the Ichimoku cloud on the weekly chart and reversed north again, retaining its bullish structure in the long-term picture.

Currently, the price is eating a portion of the bold gains it earned last week and the RSI and the MACD are providing little hope of another rocky rally in the short-term as the indicators are lacking positive momentum.

Still, the market seems to be well supported by the ascending trendline that joins the lows from May 2019 and therefore only a decisive close below it would trigger negative trading thoughts. To reach that floor and re-challenge the 1,450 territory, the price should first breach the 23.6% Fibonacci of the upleg from 1,046 to 1,703 at 1,548, while below the trendline the bears are eagerly waiting to take full control and drive towards a tougher barrier around the 50% Fibonacci of 1,375. Clearing that obstacle too, all attention will turn to the 200-weekly simple moving average (SMA) and the 61.8% Fibonacci of 1,298.

Alternatively, if the bulls dominate above 1,600, the spotlight will shift back to the 1,703 top, a break of which could extend the uptrend towards the 1,745-1,800 resistance territory taken from the 2011-2012 highs. Above that, the door would open for the 2011 peak of 1,920.

In brief, gold is not expected to start a bearish phase unless the price closes significantly below the ascending trendline and specifically beneath the 1,450 level.