Weekly chart shows strength
The weekly chart with a longer time frame (not shown) shows greater strength than what is seen in the daily chart. A breakdown of the internal weekly pattern earlier this week then turned to the upside, rising above last week’s high of 2,639. A new sign of strength will be indicated if gold can close above that high this week.
Either way, this week’s price action shows that the sellers are in control and the buyers are in control earlier this week. In other words, a failed weekly breakdown occurred. A failed jam can lead to accelerated movements in the opposite direction of the initial trigger. That would be worth gold. Either way, a signal is needed for signs of further strengthening.
Rally above 2,665 is bullish
This week’s high, and a short-term uptrend high, was 2,665. A rally above will cause both a trend continuation and a breakout above a weekly candle. Note that today’s high at 2,664 was slightly higher than the two-week weekly high. That was another sign of strength. Either way, a decisive rise above 2,665 will trigger a three-week breakout and will put gold in a good position to ultimately test resistance around December’s monthly high at 2,726.
A drop below 2,625 could lead to lower prices
On the other hand, Thursday’s support at the day’s low at 2,625 coincides with two recent daily highs and the top of an internal downtrend line (points). Next, the small uptrend line connecting the recent swing low at 2,582 marks potential support, as well as the recent interim swing low at 2,596. A decisive drop below 2,596 is a danger sign for the bulls as it shows that the short-term uptrend is faltering.
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