Rising off Strong Support
Gold has risen from a support zone that includes the 38.2% Fibonacci retracement and the 50-Day EMA (orange). A bullish reversal that is sustained off the 38.2% retracement generally indicates strength and increasing demand. The support zone is considered a little stronger than it might be given the confirmation from the 50-Day line, which points to a similar price level. In addition, another sign of strength is the fact that today’s reversal day was strong enough to reach a three-day high and stopped just shy of a four-day high. This behavior reflects strong and growing demand.
For Now, Signs Point to Higher Prices
Today’s somewhat sharp advance shows buyers stepping up and momentum increasing as price rises. Of course, it is not clear yet whether the recent 1,932 swing low will be tested again as support or fail to hold another selloff. For now, the expectation is for a continuation higher to push up again a consolidation zone up to the highs of the recent trend high at 2,009.
New Trend High Will Have Gold Target 2,024 Price Zone
If the 1,932-swing low is a bottom, gold should eventually reach the next higher target zone from around 2,024 to 2,041. Therefore, there is a good chance that short-term weakness will be bought by traders looking to enter the market to take advantage of the next swing up. So, there is certainly a good argument for the recent swing low to be the bottom before gold looks to reclaim higher prices, starting with the 2,009-swing low.
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