Gold ran with full speed on Friday to breach the descending trendline and claim a new higher high at 1,865, marking its largest daily increase since October.
The precious metal opened the new week on a negative note, though the 1,850 resistance switched immediately to support, providing some relief that Friday’s bullish breakout could be more durable. Downside pressures could persist as the Stochastics have drifted lower and are set to exit the overbought zone. Yet the steep ascent in the RSI, which has yet to touch overbought levels, and the continuous strength in the MACD suggests traders may not immediately adopt selling tendencies. Besides, the series of higher lows since the plunge to 1,680 in August may keep feeding medium-term bulls despite the market’s neutral structure.
On the upside, the next target is November’s high of 1,877. The bulls will need to clear that obstacle to continue towards the crucial resistance territory of 1,900 – 1,916. A decisive close above the latter is needed to violate the broad downward pattern from the 2,079 record high. If efforts prove successful, the way will clear towards the 2021 top of 1,959 and the nearby hurdle of 1,965.
In the event sellers drive the price below 1,850, the bulls will have another opportunity for a rebound somewhere between the broken descending trendline at 1,835 and the 20-day simple moving average at 1,823. If the market fails to gain enough buying traction within the region, the decline could extend towards 1,800, while deeper, sellers may push for another break below 1,780 and the upward-sloping trendline drawn from the 2020 March low of 1,450.
All in all, gold bulls are showing some signs of exhaustion at the moment following Friday’s impressive comeback. That said, unless the price closes below 1,823, they will probably keep trying to push higher.
