Gold had one of its best trading sessions for this year so far on Monday, reaching a fresh 7-month high of 1304.30. However, currently, the price holds marginally below this peak. The technical indicators are still located in bullish area, with the MACD stretching further above its red signal line and the RSI moving above 70. Yet the latter could also be an indication that the rally is overdone, and hence negative corrections should not come as a surprise in the next few sessions as it is pointing to the downside.
Should the price retreat, immediate support is coming from 1298, before dipping towards the 1295 barrier. Moving lower, the focus would shift to the 1286 hurdle, which stands around the bullish crossover of the 20- and 40-simple moving averages (SMAs) in the 4-hour chart. Lower still, a violation of this area would increase chances that the bullish phase has ended, and a downward correction is in progress in the near term.
In the alternative scenario, traders would be eagerly looking for a break above today’s top of 1304.30 to increase buying orders. If that’s the case, the rally could last until 1309, taken from the high on June 10. If bullish forces appear even stronger, 1326 should be another resistance to keep in mind, identified by the highs on May 6.
The recent bullish action turned the bigger picture more positive as well, and with the shorter-term moving averages (MA) increasing distance from the price, we could expect further improvement in the market.
