Price of Gold rapidly moving into resistance level

Gold is rapidly moving closer to last week’s #2 resistance target. (R1 on today’s chart). That is also the top of the parallel channel.

This resistance level is sufficiently strong that I expect some downward pressure from there. It is an important level to watch, and for some traders to consider taking at least partial profit off their positions.

If there is sufficient strength and momentum to breach R1 convincingly, then R2 will be the next logical upside target. Failure to penetrate R1 could result in a multi-day retreat downwards.


Daily Gold chart as at 21 May 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS

SMA200 – rising weakly around 867
EMA20 – rising strongly
Stochastic – overbought and rising
Li’s Sandwich – indicates resistance around the R1 level on the chart.
R1 – immediate resistance at 950-960.
R2 – 976
S1 – 917
S2 -900

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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.