Bullish Sentiment Drives Breakout
The bull trend pattern got a lift on Tuesday as an uptrend line, a downtrend line, and the 50-Day MA were all broken through. Confirmation came with a daily close above all three lines. Resistance was seen around the 20-Day MA, which has continued since then along with a slightly higher price of $3,366.
Given this week’s bullish price action the expectation is for gold to continue to advance higher, but it first needs a signal. A decisive rally above this week’s high of $3,366 indicates a continuation of the near-term bull trend. That will also trigger a weekly upside breakout and surpass the 20-Day MA, which currently shows dynamic resistance.
Weekly Timeframe Confirms Strength
On the weekly timeframe, gold ended the week showing gains and in a relatively bullish position, in the top third of the week’s trading range. Furthermore, this follows a short-lived decline below last week’s low of $3,256 before a lower weekly low of $3,247 was reached. In other words, an undercut and run bullish reversal triggered. Last week’s lows broke, leading to stops being triggered and weak holders getting flushed out.
Subsequently, buyers quickly took back control following a short time below last week’s low. And the switch to bullish sentiment was indicated by a daily close above last week’s high on the breakdown day of June 30. That showed a failed breakdown. Once a breakout fails in one direction, there is potential for a clear move in the opposite direction. For gold that would point to higher prices.
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