The first trading day of October saw gains in the price of gold, as end of quarter selling pressure from last week appears to have left the market in a position for a short covering rally. Gold futures pushed off swing lows to move back above the $1,660 per ounce once again, and appear to be moving towards resistance provided by the Rising Channel seen here on the hourly chart.
The resistance at the top of the Rising Channel chart pattern currently rests at slightly above the Monday closing price at $1,670 per ounce, which will be the next level for traders to look for technical strength. A move above this level would be encouraging for a longer term move back to the previous highs above the $1,920 level, and diminish the odds of another retest of last month's low below the $1,550 support.
If the current strength reverses in Tuesday's session, the channel provides key short term support at the $1,630 per ounce price level. Failure for this support level to hold would initiate a downside breakout, though the current acceleration of the uptrend suggests a move higher from here is the likely path of least resistance.
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