The Technical Argument for Gold

Let's put Gold under a technical microscope. In March 2017, gold ran on the perfect storm.

Leading up to the hike in interest rates, the price of gold pulled back from a high of $1,264.90 to $1,200 on fears the yellow metal would quickly fall out of favor. Instead, shortly after that pullback, it caught and held double bottom support at $1,200 where buyers began to accumulate the metal on global uncertainty with elections.

Shortly after, gold prices would run back to $1,261. 

_________________________________________________________________________

Are You a Frustrated Trader?

Learn to Trade From Seasoned Professionals. Apply Your Knowledge
and Skills and Get Paid To Trade! Learn How Here

_______________________________________________________________________

 

Nowadays, as we can see in the chart, gold could do one of two things.  One, it could fail at triple top resistance just under the 200-day moving average, which is possible given the over-extension on momentum indicators like relative strength (RSI) and Williams’ %R (W%R).  Both are both sitting in overbought territory.

Or, two, it could break well above that triple top and potentially challenge a previous high of $1,300.  From what we can see, there’s no real resistance to that point once gold breaks above $1,264.90.  It also depends on political and global issues, too.

Gold prices also depend on the strength of the U.S. dollar, which is currently on a downtrend.

After failing at 102 double-top resistance the dollar has fallen well under 100 to 98.98.  It could potentially fall to its 200-day moving average at 98.44 before long.  Should that fail to hold as support, the currency could see a retest of 96, which it tested in November 2016.
 

By watching the movement of the US dollar, along with the Williams' %R (W%R), MACD and RSI, you can get a better idea of overbought or oversold conditions. At present, all three are over sold, suggesting a potential near-term bounce to the upside.

_________________________________________________________________________

Are You a Frustrated Trader?

Learn to Trade From Seasoned Professionals. Apply Your Knowledge
and Skills and Get Paid To Trade! Learn How Here

_______________________________________________________________________