Will Gold Break Above a Long-Term Downside Line Soon?

Gold has been in a rally mode since Thursday, after hit hitting support at 1758 the day before. Today though, that rally was stopped near the downside resistance line taken from the peak of August 6^th, 2020. The metal stays below that line, but it also trading above an upside line taken from the low of August 9^th, this year. Thus, as long as it stays between those two lines, we will stay neutral.

In order to start examining further advances, we would like to see a break above the crossroads of the aforementioned long-term downside line and the key resistance level of 1834, which has been acting as a temporary ceiling since July 15^th. The next stop may be the 1857 line, marked by the inside swing low of June 4^th, the break of which could pave the way towards the peak of June 11^th, at 1903, or the high of June 1^st, at 1917. If neither territory is able to stop the advance, then a break higher could see scope for extensions towards the high of January 6^th, at 1959.

Shifting attention to our daily oscillators, we see that the RSI rebounded from slightly below 50 and is now close to 70, while the MACD lies above both its zero and trigger lines, pointing up. Both indicators detect decent upside speed, suggesting that the metal may have the necessary strength to overcome the downside line this time around.

On the downside, we would like to see a dip below 1758 before we start examining whether the bears have stollen the bulls’ swords. Such a move could also confirm the break below the upside line taken from the low of August 9^th, and perhaps initially allow declines towards the low of September 30^th, at 1721. If that barrier doesn’t hold either, then we could see the fall extending towards the low of August 9^th, at 1683, a territory that provided strong support back in March as well.