Gold Technical Analysis and Near-Term Outlook
Gold gained a bit of bullish momentum for the near-term after rising above the $1864 swing high and settling back above the 200-day moving average yesterday. Furthermore, the wave up from $1800.8 fulfilled its $1866 smaller than (0.618) target. This is important because waves that meet the smaller than target generally fulfill their equal to (1.00) target, in this case, $1885. Settling above $1885 will call for a test of the $1905 intermediate (1.382) target, which is also in line with the 62 percent retracement of the decline from $1962.5.
As stated in yesterday’s analysis, for the larger scale move down to retain a reasonable chance at extending $1905 must hold. Closing above $1905 would imply that gold is adopting a firmer bullish outlook and call for a test of $1922. This is the larger than (1.618) target of the wave up from $1800.8 and the smaller than target of the more important wave up from $1767.2.
Nevertheless, today’s lackluster follow-through after yesterday’s rally formed a daily hanging man. Normally, this type of pattern is most effective at predicting a reversal at the top of a long-term uptrend. Even so, today’s trading suggests the move up might still prove to be a short-lived correction. Falling below $1846 will call for key support at $1829. Closing below $1829 will confirm the hanging man and invalidate the wave up from $1800.8 that makes the connection to $1885 and higher.
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