Gold has shifted to a more bullish bias in the near-term after strong upside momentum last Friday pushed the metal above a key Fibonacci level. On the 4-hour chart, a bullish signal was given by the crossover of the 50-period moving average above the 200-MA.
On Friday, prices rallied after a break above the 23.6% Fibonacci (1283.47) of the downleg from 1357.47 to 1260.59. Momentum faded when the market reached overbought levels. The 4-hour RSI crossed above the 70 level and this is when prices pulled back. The rally also slowed down just ahead of resistance at the 38.2% Fibonacci (1297.58).
A daily close above immediate support at 1290 would help keep momentum to the upside but 1297.58 needs to be broken to strengthen the move up to target the key 1300 area soon. Alternatively, failure at 1290 support would take price back down to 1283.46 and from here the odds get stronger for a re-test of the 1260.59 low.
Since the end of October, prices have been making higher lows but in the bigger picture, the market still does not show a clear direction in the trend, which has mostly been neutral since the drop from 1357.47.
