Strength Returns
A higher daily high and higher low will complete today and put gold in a position to continue to advance a small rising counter trend that began from the December swing low. It is interesting to note that prior dynamic resistance (dotted line) indicated by the internal declining trendline was successfully tested as support yesterday.
The low for the day was close to it before buyers took back control and the price of gold strengthened. That is a bullish sign given that the line was previously resistance. Next, a rally above the 2,637 high would be needed to signal a bullish continuation of the trend. Potential resistance would then be around the top trend line of a declining channel.
Bearish Below 2,633
Weakness would be indicated with a drop below today’s low of 2,633. If that occurs, then Monday’s low of 2,615 may be retested as support. And that would also put the 2,615 low at risk of failure. Key support would then be around an internal uptrend line, which is estimated at 2,604 today.
Downward Pressure from Declining Channel
Since gold is strengthening within a larger declining bearish trend channel, it is anticipated to continue to rise and test potential resistance around the top of the channel. The 78.6% retracement at 2,695 can also be used as a guide. Until there is a new lower swing high, the downtrend price structure is retained due to the lower swing high of 2,726 from December 12.
For a look at all of today’s economic events, check out our economic calendar.
