Gold Technical Update
Gold pushed higher yesterday after the FOMC pledged to extend the low interest rate period through the end of 2014. The reaction was USD weakness across the board, while equities gained, a risk-on event. Gold also pushed higher as it is priced in the greenback. The market broke above the declining trendline seen in the daily chart, invalidating the previous descending triangle scenario. The RSI pushed above 60 and reflects breakage of the bearish momentum.
The scenario is more like a completed double 3 correction, and now we are either in some kind of wave X, that connects another set of correction, or a bullish continuation. Let's start with a conservative bullish outlook, and look at this market in a consolidation scenario. That suggests more respect for the resistance pivots. The daily chart shows that the market is now pushing at 1721.70, 50% retracement of the 1920.75-1522.60 bear run. The next level of resistance is near 1768, a previous pivot and 61.8% retracement. Above this there is a pivot at 1800, which should be the maximum target for the moment, before opening up the 1920.75 high.
Fan Yang CMT is the Chief Technical Strategist of IBTRADE and FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.