Technical Analysis – Gold attempting to bounce higher
February 6, 2014 9:10 amVideo
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Gold prices began a rebound from the end of January to rise to a high of 1274.09 on February 5. Gold has since corrected this up-leg by 61.8% and is currently capped just below the 38.2% Fibonacci retracement level at 1260.20. Key support is at the 61.8% Fibonacci level of 1251.90. The 100-period moving average is also providing key support on the 4-hour chart.
The 50% retracement level has proven to be a key turning point, from which prices have bounced. Since prices started to turn higher and the last two candles are bullish on the 4-hour chart, this could suggest the correction to the 50% Fibonacci level has been completed and momentum is to the upside.
Technical indicators show the RSI is hovering just above the 50 level which separates bullish and bearish territory and is slightly rising. The stochastic is oversold and beginning to turn up, signaling a good entry point to go long. Both these indicators suggest that there is room for a move higher. Also, the 20SMA has crossed above the 50 SMA and 100 SMA which is a bullish signal.
The bullish scenario remains strong above 1251 (above the 61.8% Fibonacci). The 1265 level (23% fib) will be targeted and above this the 1274 level (Wednesday high).
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