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Technical Trading: Gold Builds Higher Daily Lows

(Kitco News) – Gold prices punched higher to start the New Year on a positive note. Gold bulls are building value above a minor series of higher daily price highs, which is a short-term positive signal for the market. Overall, the near-term trend outlook remains neutral and range-bound, but the trend bias is improving within that range.

The near-term neutral range: Since mid-November, February Comex gold futures have shifted into a neutral range trade bordered by resistance at $1,088.30, the Dec. 4 high and support at $1,045.40, the Dec. 3 low. In the bulls favor, higher daily price highs have formed at $1,045.40, $1,046.80 and then $1,056.50, marked at Points A, B and C in Figure 1 below.

The trend indicators: The gold market has surged higher through initial 20-day moving average resistance at $1,069.20 on Monday, which is a short-term positive trend signal. Sustained gains above the 20-day moving average line this week will give the bulls the edge.

Daily momentum indicators are improving and favorable. The 14-day relative strength index points higher at 52% on Monday. Sustained readings above the 50% zone this week will suggest bullish momentum is accelerating.

The target: On the upside, the bulls are targeting a retest of the recent range top resistance zone at $1,088.30. It would take a sustained rally move above the $1,088.30 area to turn the near-term trend to bullish and to confirm a minor bottom on the daily chart. Beyond that point, the 100-day moving average line at $1,112.40 lies as a bullish objective. The burden is on the bulls to attack the $1,088.30 ceiling and close above it to confirm a near-term bullish trend change.


By Kira Brecht, contributing to Kitco News;
Follow her on Twitter @KiraBrecht