Gold Technical Update

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Gold (XAU/USD)
Gold 1H Chart 8/15/2011
1767.70 and 1779.50 Targets:
- Gold is in a bullish breakout after spending sometime in a congestion or triangle pattern seen in the 1H chart. After breaking above 1757, the market's next higher pivot is at 1767.70 area.
- Above that 1779.50 is the next pivot, within the consolidation context.
- Note that the RSI never touched 30 in the 1H reading, and if it breaks above 60, that weak bearish momentum is killed. Pushing above 70, the 1H RSI reading can confirm the short-term bullish scenario.
- Breaking above 1780 suggests that the market may have been done with the brief correction and a bullish continuation could be at hand in the medium term.
-  Nonetheless we might want to see success of breaking back above the psychological resistance at 1800 before being confident of the return to strength.
- Risk aversion is helping gold maintain its extremely bullish stance. In the daily chart, the RSI is not even back below 70 yet, so maybe in the short-term we still need to resolve a corrective decline.
- The bullish continuation case has fibonacci expansion targets at  1829.76 (138.2%) and 1861.00 (150%). 1850 is between these levels, and is a psychological target above the 1800 level.
Gold 8/15/2011 Daily Chart

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Fan Yang CMT
Chief Technical Strategist
FXTimes