Since breaking the declining trendline seen in the daily chart, gold (XAU/USD) has rallied to the first target/resistance level near 1760 (1768 is 61.8% retracement of the 1920.75 to 1522.60 run). Looking at the daily chart, we also see that a break above 1770 should clear the way for 1802, the next target/resistance. Above that opens up the record high at 1920.75. The RSI in the above chart hit 70, reflecting the fact that gold has not turned bearish, but rather turned sideways, though in the short to medium term it has kept bullish momentum, as we will see in the 4H chart below.
The 4H chart shows that the market has been trading in a channel, and just bounced off the projected support trendline. The RSI in the 4H chart has tagged 70 several times, and bounced off 40 Jan. 25, reflecting persistent bullish momentum. The 2/7 US session showed the RSI reading bounce off 40 again. With a break above 60, we can say that the momentum was maintained and re-established. A break above 1760, 1768, should push the RSI to 70 confirming the bullish momentum toward the next target area around 1800.
Fan Yang CMT is the Chief Technical Strategist for IBTRADE, trader, educator and a main contributor to FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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