PRICE OF GOLD: TOWARDS RESISTANCE LEVEL OF $960

Last week I proposed a scenario for the coming week that suggested the probable price movement for gold: that is that the market may find difficulty closing above 920. because of resistance at that area. If that happened, price would likely tumble towards support around 880 before gathering enough bullish energy to break through resistance to create a new high above 927.

All of that happened, as the market moved down toward support at 880, reaching 890, encountering bullish strength and bounding upwards strongly for two days.

Presently gold has moved very close to a new zone of resistance which begins at 951-990. The area between 951-960 should be particularly strong.

If resistance at 960 is sufficiently strong, watch for a possible drop down to 900. again, if not lower.


Daily Gold chart as at 12 February 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS

Stochastic – rising in overbought area
MACD – Rising, but showing lack of commitment to the upside. Profit taking has occurred within the past two weeks and the current up move may be in weaker hands implying a lack of strength for a sustained bullish trend
EMA20 – rising in support of price
R1 – resistance zone from 951- 960
R2 – 990
S1 – 929
S2 – 888.
Channel lines – the convergence of two sets of channel lines at the top implies strong resistance..