The price of gold pushed to a high near $4,450 last week before reversing lower and falling back below two important technical levels: the 100-day moving average at $4,390.87 and the 100-hour moving average at $4,384.33. That decline took gold down toward $4,350, where buyers stepped back in.
In trading today, the technical picture has improved. Gold has moved back above both the 100-hour and 100-day moving averages, and the renewed buying momentum has carried the price to a high of $4,427.65. The current price is trading near $4,422.
From a technical perspective, the move back above those key moving averages is a bullish development and shifts the short-term bias more firmly in favor of the buyers.
The $4,384-$4,391 area now becomes the key close-risk zone for buyers. Staying above those moving averages keeps the buyers in control and supports a continued move higher. Conversely, a move back below both levels would weaken the bullish technical picture and shift the short-term bias back to the downside. If that occurs, the rising 200-hour moving average at $4,336.19 would become an important downside target.
Recall that moving-average support has played an important role in gold’s recent advance. Back on August 5, the price based near $4,061, where the 100- and 200-hour moving averages helped establish a floor before the subsequent move higher.
On the topside, the first major target is last week’s high near $4,450. A break above that level would put the 200-day moving average at $4,491 firmly in play. Gold has not traded above its 200-day moving average since June 5, making that level particularly important. A sustained break above it would strengthen the bullish technical structure and open the door for additional upside momentum.
Key levels:
- Bullish above: $4,384-$4,391
- First upside target: $4,450
- Major upside target: 200-day MA at $4,491
- Downside target on a failed break: 200-hour MA at $4,336.19
In the video above, I break down the technical levels in play and show how the move back above the key moving averages has shifted the bias, while outlining the risk levels and upside targets traders should be watching.
This article was written by Greg Michalowski at investinglive.com.