Rebound Above Key Lines
Both a prior interim swing low from May 29 and a downtrend line identify Monday’s low. It is interesting that the two lines intersect on the day they were touched. The bullish response led to a quick recovery above both a rising trendline and 50-Day MA, now at $3,320. Each line marked dynamic support for the uptrend. A quick recovery is bullish as it shows the trend structure being retained overall, after being at risk of failure. A daily close above the 50-Day line will confirm the bullish implications of the recovery. Nonetheless, additional signs of strength are needed.
Above $3,358 is Bullish
A decisive rally above Tuesday’s high will show strength and the potential for upside continuation of a short downtrend line breakout that triggered today. Confirmation of a reclaim of the 20-Day MA will occur on a daily close above the line. Otherwise, watch for a bullish reversal above an interim lower swing high at $3,396 to confirm strength. Reclaiming that price level will show growing demand that could lead to an attempt to rise above the recent $3,451 swing high.
Momentum Boost Missing
Since the swing low in May at $3,121, gold has seen slower momentum, which has been a concern. If it is going to have enough energy to bust through trend highs, bullish momentum needs to increase. Otherwise, consolidation may continue with small moves up and down. Since gold is showing new strength and upside potential, this is the time to see confirming bullish momentum. But if it fails to show even as the price of gold creeps higher, demand may not be strong enough to eventually break out above the record high of $3,500 without further consolidation occurring first.
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