Since last week, I warned gold bears that gold was about to make a strong rally towards at least $1,330-40. Yesterday we saw gold price break above $1,350, but the most important is the structure of the rise from $1,302 that is impulsive.
Black line -trend line resistance
Gold price has broken above the black trend line resistance and the Ichimoku cloud on the four-hour chart. This is a bullish sign. The form of the rise is impulsive implying more upside is expected after a pullback. There is no sign yet of a pullback but once it comes I believe it should be bought.
Blue lines - bullish channel
The bullish reversal hammer candlestick from last week is given the follow through bulls needed. Price has broken above the weekly tenkan-sen (red line indicator) implying that the recent highs will be tested. Price remains inside the bullish channel.
With the bounce coming this high and the decline from $1,375 being clearly corrective, a break below $1,300 will open the way for a move to $1,200 which is the next buy level for a long-term move up. For now we assume the decline is over and the most probable scenario is that any pull back will not break below $1,300.
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