Price of Gold - Overbought area but holding

Gold finally broke out of it’s nearly four week trading range and managed to move above initial resistance around 778 and is currently stopped near my previous R2 level at 813.50 (now R1 on the current chart).

The zone immediately above the current price, from 826 – 854 is a formidable area of resistance.

So far I define the strong up move as only part of a correction of the down move that occurred between Oct. 10, from a high of 931.50 to Oct 24, at a low of 681.50. A strong close above 854. could redefine the recent up move as part of a new uptrend.

A drop below S1 and the rising trend line on the chart would signal weakness and a probable test of the S2 region.


Gold chart as at 27 November 2008 using NextVIEW Advisor

TECHNICALS

NextView RSI – registers as being on the high end of a down trend.
Stochastic – in the over bought area, but sustaining that level.
EMA 20 – price is above the rising moving average, a positive sign.
R1 – 826-854.
S1- 765.
S2 – 681.50

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Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.