Range tied to moving average broken
This week’s price action keeps gold prices between resistance around the 20-day MA at 2,719 and support at the 50-day MA at 2,643. This could lead to further consolidation between the two moving averages or a move through one of the price levels.
Note that the 50-day line accelerated its angle of climb around early October. It started to rise away from the internal trendline, which is also a lower parallel channel line. That behavior is consistent with rising demand and improving bullish momentum. Yesterday was the first test of support at the 50-Day MA after the bullish reversal from the line on August 5.
Monthly support at 2,602
The swing low at 2,602, which is also the bottom of a bull flag pattern, forms the trend structure of higher swing lows. Therefore, a drop below that will show a change in that price structure and increase the potential for a continuation lower. Importantly, prices bottomed out at 2,602 also providing support for the month of October.
Strong trend of higher monthly lows
Since February, gold has trended for nine months, with a series of higher monthly lows and higher highs, with the exception of June, which was an inside month. November also becomes a possible intra-month pattern. It seems like there is a good chance that gold will end the month in a similar position. What this means is that the pattern of higher monthly lows defines the strength of the uptrend and a drop below a monthly low will be a marked change in the pattern. Once that happens, the chances of a deeper retracement increase.
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