GOLDBUGS AMEX Goldbugs Index (GOLD)

[DiscoverGold]

Gold: Key Resistance at 50-Day MA
By: Bruce Powers | February 22, 2024

• Gold's rally to a two-week high faces resistance at the 50-Day MA, suggesting a possible pullback before further attempts are made to trend higher.

A two-week high in gold triggered on Thursday for the second day in a row, before resistance kicked in. Gold hit a high of 2,035 today, exceeding the 50-Day MA just slightly, before sellers took control and drove prices back down to below yesterday’s low, thereby generating an outside day. Once again, the 50-Day line is recognized by the market. This is telling us to keep an eye on it going forward.

50-Day Moving Average Shows Strong Resistance

The 50-Day MA has been successfully tested as resistance for each of the past three days when there was a higher daily high. In addition, last week’s high also recognized the 50-Day line as a resistance area. Each attempt to go higher has failed at the 50-Day line. The tests reflect improving demand but not enough yet to put price well over the line. Given today’s failure and relatively weak close, plus the uncertainty reflected in the outside day candle, increases the chance for a pullback before another attempt to trend higher occurs.



2,015 Marks the Next Support Area

Near-term support is possibly at the three-day low of 2,015, which was a minor swing low from early-February and was recognized as resistance most recently on February 16. Slightly below there is the 8-Day MA at 2,012. It is quickly followed by the 50% retracement at 2,008, along with a minor swing low from January 25 at 2,009.

Daily Close Above 50-Day Moving Average Will Confirm Strength

An advance above today’s high of 2,035, also the weekly high, will provide a bullish signal. However, a daily close above that price level will be needed to confirm a breakout above the 50-Day MA. Once that happens gold will have a better chance of continuing to strengthen and test potential resistance levels. Note that yesterday an upside breakout of a hammer candlestick pattern triggered on the weekly chart.

Each of the past two swing highs will then become a target at 2,065 and 2,088 once a breakout is confirmed. However, as noted on the chart, a primary initial upside target has been identified at 3,000. That is where an ascending ABCD pattern completes. It will mark the point where the CD leg of the pattern matches the price appreciation seen in the AB leg and therefore shows symmetry between the two swings. Once there is symmetry, the chance for a pullback increases.

Read Full Story »»»

DiscoverGold