From Rouyn-Noranda, Quebec:
Gold continues to shine and our technical analyst prepared the following updated chart and comments going into today’s trading action:
John: As all stock markets in North America sank in a sea of red Monday, Gold (continuous contract) glittered and rose $20.60 per ounce to close at $1,241.60.
Looking at the chart I have drawn a resistance band (2 parallel blue lines) between $1,225 and $1,250. The price of Gold must break this barrier to make new highs. The upsloping green line is a long term support trendline. The blue band and the green trendline form a bullish ascending triangle with its apex occuring around the end of August, 2010. Thus, between now and the end of August, Gold will have to make a definitive move – either upwards to new highs or break the trendline and move down or sideways.
Looking at the chart patterns we see the high in February 2009 (mauve circle) was followed by a decline in Gold until September/October when it rose again to the same level. It met resistance however for 5 weeks (black circle) before it broke out and moved to a new high of $1,225 in November, 2009. After making that new high (mauve circle) we see that Gold duplicated the chart so now it is at the similar position of the first black circle (i.e., trying to break up through resistance (2nd black circle). This is the 6th week of consolidation so we could possibly see a push above $1,250 this week.
The new Fibonacci target if Gold breaks out is shown as $1,546 (green bar at the top).
The SMA(50) is providing strong support and is climbing, indicating a bullish trend.
Looking at the indicators:
The MACD is bullish as it has both lines above zero and pointing up.
The ADX trend indicator has the ADX trend strength line at 28 and climbing. The +DI is climbing and is above the -DI which is falling – a very bullish orientation.
The Slow Stochastics indicator is high and is bullish.
Outlook: There is a strong probability that Gold will break out to new highs in the near future, possibly as early as this week.
