After testing the 1,400 round number twice after the incredible slide, Gold has finally cleared the ceiling and accelerated higher towards the 38.2% Fib Retracement level after pushing above the previous swing high of 1,405. This also marks the continuation of bullish correction from 16th April back towards 1,500, back at where all it started. Prices have been producing higher highs and higher lows, which makes a good case for a uptrend, while Stochastic readings is showing a divergence with consecutive peaks heading lower yet price heading higher.
This divergence suggest that current peak could be a red herring and a bear cycle may not truly materialize despite the fact that the 38.2% Fib is proving to be a good resistance against current bullish momentum. We could potentially see price trading towards 1,400, while finding support along the rising trendline to re-test the 38.2% Fib if price is unable to push up higher right now. But that is in no way a sign that price will be able to reach the previous bearish glory of 1,322.
Fundamentally, nothing has really changed much, the whole selling wasn’t truly a fundamental push but due to an extra large sell order that spooked the market last Friday. Right now it seems that market believe fair value of Gold to be higher, but bulls were simply being cautious about buying too much as there wasn’t any evidence that the bear trend has ended. With a new uptrend coming up, we could potentially see more bulls gaining confidence to buy into the same gold which they sold in a puff earlier.
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