Technical Analysis – Gold short-term bullish after posting five-month high

Posted on April 10, 2017 at 7:25 am GMT by the XM Investment Research Desk

Gold is marginally up from the day’s open, while it posted a five-month high during the previous trading day (Friday).

A positive short-term alignment has been in place since March 27 when the Tenkan-sen line (red) crossed above the Kijun-sen (blue). The RSI indicator adds to this signal, as it is currently at 60, comfortably exceeding its perceived neutral level which is at 50. Notice though that the Tenkan-sen line is flat at the moment, perhaps indicating that any upside would lack a strong momentum.

On the upside, the current level of the Tenkan-sen at 1255.15 might resist a daily close above it. Further up, the 200-day moving average (MA) at 1257.86 could offer additional resistance. Note that Friday’s high violated the 200-day MA, but failed to achieve a daily close above it. If the price moves further up, Friday’s five-month high of 1270.76 would be eyed as another potential barrier to the upside.

On the downside, the area around 1240 has been a congested one in the recent past and could offer some support. If the price falls below, the 50-day MA at 1234.87, together with the Kijun-sen and cloud top which coincide at 1233.00, could form an additional support area.

Looking at the bigger picture, it looks prices have been consolidating over the last months, setting a neutral medium-term outlook.

To sum up, the short-term bias is bullish and the medium-term is looking neutral.

Source: www.xm.com