Gold Price: Vigorous Bounce Off of Trend-Line Support
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- Gold Technical Strategy: Flat
- Gold has rocketed higher after disappointing US inflation printed ahead of Thursday’s FOMC announcement.
- Continued support above $1,100 has helped to establish a higher-low, but with the big-picture down-trend, posture remains bearish.
Gold ran down to a projected trend-line (on the below chart, in red) last Wednesday, and has spent the majority of the five trading days leading into this morning riding on this same trend-line, as we had outlined in yesterday’s piece. Since then, US CPI came in below expectations ahead of tomorrow’s FOMC announcement, and this has provided the strength for Gold to put in vigorous price action off of support to run directly into the 34-day Exponential Moving Average.
While this movement higher doesn’t completely negate the down-trend, it does give reason for caution ahead of a critical data announcement in a very rate-sensitive asset. Upcoming resistance at $1,125 (prior price action swing-highs/lows), $1,140 (psychological level), $1,155.47 (61.8% of the ‘secondary move’ taking the low from 2008 to the highs of 2011), and/or $1,170 could prove attractive for potential short positions; with targets cast towards $1,100 (recent higher-low and psychological level support), and then $1,087.05 (50% of the major move from the 1999 low to the 2011 high).
Alternatively, breaks above $1,155.47 (61.8% of the ‘secondary move’) could negate the bearish posture altogether, and open the door for targets at $1,170 (lower-high price action swing and psychological level), and then $1,200 (previous lower-high price action swing and a ‘major’ psychological level).
--- Written by James Stanley, Analyst for DailyFX.com
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