TECHNICAL ANALYSIS – GOLD BULLISH AS IT ENTERS THE CLOUD; RECORDS 2-MONTH HIGH
Gold is posting some gains during today’s session so far, at one point rising above 1219 recording a 2-month high. Should it close higher, it will mark the 10th trading day of gains out of the last 11.
Delving into the Ichimoku analysis, the Tenkan-sen line (red) has crossed above the Kijun-sen (blue) in the beginning of January. This alignment is a bullish short-term signal. The bullish short-term momentum is reinforced by the RSI indicator which is at 66, well above the 50 threshold that separates bullish from bearish market sentiment (note though that it is fairly close to the 70 overbought level).
Continuing with the Ichimoku, prices have recently entered the cloud. Should they exit it from above, we would expect a continuation of the uptrend. However, if they exit it from below, a change in momentum is to be expected.
The 1220 key-level is likely to provide some resistance to upside moves. Should the price close above this level, the cloud top at around 1230 will come into view as another resistance point.
On the downside, the cloud bottom which coincides with the 1200 psychological level is expected to act as support (this is roughly the level of the Tenkan-sen line as well). Should this mark be challenged, it will bring into scope the 50-day moving average (MA) at 1178.05 as another important support point.
Looking at the bigger picture, despite a bearish cross being recorded in November with the 50-day MA moving below the 200-day one, price action since then has challenged the strength of this signal setting a more neutral medium-term outlook.