Gold prices have reached an important technical confluence node – rising above this key level would be tremendously bullish, but there’s a good deal of bearish confluence resistance overhead… but gold might just make it above with just a little push.  Let’s look at the daily and weekly charts to see these developments.

Gold Prices Weekly:

The significant resistance takes place at the $830.35 level, which corresponds with the 38.2% Fibonacci retracement of the current down move, and is combined with the falling 50 week EMA at $827.30.  If would be a major accomplishment for gold to close above the $831 per ounce level soon.

However, it has significant headwinds before doing so.  The weekly chart is in a technical downtrend which has been confirmed, and the momentum oscillator just registered a new momentum low in November, confirming the price lows.  We’re technically on (or ending) a counter-swing rally into resistance, but the recent bullish candle either will help shake the bearish technical picture… or fall victim to it.

The EMA structure is in a bearish orientation (the 20 is beneath the 50), and both serve as overhead resistance – which is occurring this week.

For Fibonacci purists (using absolute spike highs and lows), the 38.2% retracement registers at $818.92.  I tend to side with Constance Brown and use significant or closing prices instead of spike prices, somewhat of a controversial technique.

Now, let’s drop to the daily chart and see another reason why a close above $831 per ounce would be mighty significant.

Gold Prices Daily:

Like the weekly chart, the trend is still confirmed as officially ‘down,’ and the EMA orientation is actually in “the most bearish structure possible” – those are even stronger headwinds against which to fight.

There isn’t a positive momentum divergence, but rather a sense of positive momentum building along with the price.

The $830 zone is significant for one subtle reason.  Should price breach the November highs, we would officially confirm a fresh uptrend in the daily chart on the price of gold – that would be the genesis of a new technical trend, and short-term timeframes precede long-term structure timeframes… but let’s not get too far ahead of ourselves.  Doing so would lock in a pattern of higher highs and higher lows – failure at this level would lock in a double top and leave gold prices inches away from a true reversal.

Mini-Gold futures (as of this writing) are trading around the $721 level after reaching an intraday high of $829.60.

Continue to watch this closely to see what happens at this critical technical juncture.

Corey Rosenbloom
Afraid to Trade.com

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