Gold targets crucial stopping point after fast rally [Video]
Gold hit a new 2-month high at 1,821 on Monday after the rapid rally in the last two trading days, pushing the price up 2.7%, but it was still not enough for reach the crucial resistance of 1.833. Note that this is where the 38.2% Fibonacci retracement of the 2079 to 1676 fall is also positioned.
The momentum indicators continue to fuel some optimism that the final rally could gain additional legs in the coming sessions. Despite testing its previous limits, the RSI remains elevated above its neutral mark of 50, the MACD is positively charged above its red signal line, and the Stochastics are just entering overbought territory, while maintaining upward short-term bias.
If the wall around 1,833 meltdown, the bulls could face an immediate suspension near the 1,845 barrier last seen mid-year. A clear move above the latter could attract significant buying interest, with the price likely rising to 1,870, although long-term traders may not participate until the 1,916 to 1,916 cap hits. cracks.
If sellers come in, 20 and 200 day simple moving averages (SMAs) can remove downward pressure around 1790. The 23.6% Fibonacci of 1770 proved to be a tough hurdle last week. Therefore, any close below could confirm further losses, possibly until support trend line currently seen near the swing low of 1,758. Lower down, some consolidation could develop near 1,754 before all eyes turn to September’s bottom line at 1,722.
In summary, gold should generate more gains in the near term, although it remains to be seen whether it will clearly break out of its three month old range area above 1,833.