Strength returns
A higher daily high and a higher low will wrap up today and put gold in a position to further advance a small bullish countertrend that started from the December swing low. It is interesting to note that previous dynamic resistance (dashed line), indicated by the internal descending trend line, was successfully tested as support yesterday.
The day’s low was close before buyers took back control and the price of gold strengthened. That’s a bullish sign, as the line was previously resisting. Next, a rally above the high at 2,637 would be needed to indicate a bullish continuation of the trend. Potential resistance would then be around the upper trendline of a descending channel.
Bearish below 2,633
Weakness would be indicated by a drop below the current low of 2,633. If that happens, Monday’s low at 2,615 could be retested as support. And that would also bring the risk of failure of the 2,615 low. The main support would then be around an internal uptrend line, estimated at 2,604 today.
Downward pressure from descending channel
As gold is strengthening within a larger descending bearish trend channel, it is expected to continue rising and test potential resistance around the top of the channel. The 78.6% retracement at 2,695 can also be used as a guide. Until there is a new lower swing high, the downward price structure will remain in place due to the lower swing high of 2,726 from December 12.
For a look at all of today’s economic events, check out our economic calendar.