An interesting trading session for gold bugs today, as the precious metal appears to be attempting to breakout of its recent malaise in the $1280 to $1340 per ounce, where the price has remained waterlogged for the last few weeks, with the commodity testing the $1368 per ounce region at the time of writing. Should this candle subsequently close at this level tonight, then this will be a strong signal of further bullish momentum to come, provided the move higher is supported by rising volume.
Today’s price action, is not only significant for the breakout, but also suggests that the metal is now preparing to test the deep area of price congestion immediately ahead, and clearly visible on the volume at price histogram on the left hand side of the chart. This area will now define the price of gold in the short term. The upper level is denoted by the yellow dotted line, and sits squarely at $1400 per ounce, whilst to the downside, $1370 per ounce is the resistance area, which is now being tested in this evening’s gold trading session. The long road back for gold however is not going to be easy, given the depth of price resistance at this level and others as we move into the $1400 per ounce area and beyond.
The key as always will be the associated volume. If the breakout is NOT accompanied by high or ultra high volume, then be warned, this may simply be a ‘fake out’ and not a genuine move higher. Nevertheless, something to cheer about for the gold bugs.
By Anna Coulling