Updating Key Levels for Gold in the Breakout

Feb 24, 2014: 8:03 PM CST

We’ve seen clear relative strength in gold prices over the last week.  Let’s take a look at the current Daily and Weekly Chart structure and highlight the key reference levels for trade planning.

We’ll start with Gold’s Weekly Chart:

Gold GC Weekly Chart Moving Average Resistance Planning

We’ll start with a possible “Double Bottom” Chart Pattern that developed off the $1,200 per ounce level in the context of a Positive Momentum Divergence.

Note also the Bullish Engulfing Weekly Candle at the start of 2014 which added fuel to the bullish fire.  The outcome has been a test – then breakout – of both the falling 20 week EMA and $1,300 round number price reference area.

The breakout above $1,300 set in motion a bullish “Open Air” play toward the current resistance cluster near $1,350 which we can see clearer on the Daily Chart:

GC Gold Daily Chart Fibonacci Trade Planning 200 day SMA

First and foremost, let’s highlight the prior price high from October 2013 into the $1,350/$1,360 per ounce price level.

We’ll also make note of the 61.8% upper Fibonacci Retracement level as drawn which intersects today’s high price near $1,340.

The other key factor to watch is the blue highlighted region between the falling 200 day SMA (and 50% Fibonacci) with the 61.8% level that is just shy of $1,350.

In other words, price simply continued a strong bullish impulse up off the $1,200 level to trade again impulsively above $1,300 toward our current targets.

The chart suggests that additional bullish price action above the highlighted zone – particularly $1,350 and $1,360 – suggests gold is engaged in a short-term trend reversal that could carry price toward the August 2013 high near $1,450.

Focus on these chart levels – particularly those seen on the Daily Chart – and be on guard for any bearish action on a return under the 200 day SMA reference level that’s intersecting $1,300.

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Corey Rosenbloom, CMT
Afraid to Trade.com

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