Technical Analysis of Gold
Gold has been trading sideways to slightly downwards throughout the week within a tight consolidation channel. The precious metal got under some pressure yesterday on the back of a stronger US Dollar, but as the US dollar is declining heavily across its major counterparts in early trading, the bulls seem to have the regained the control pushing the precious metal back to the 1.650 level. Considering that the MACD has been in positive territory since the beginning of 2009 on the weekly chart, the market remains in a strong uptrend. Despite the bearish outlook on the daily chart, bullish sentiment towards the precious metal has built up bears on the hourly chart, with the MACD signal line flipping over zero and the 20 EMA crossing above the 50EMA. The continuation of the downward movement of the US Dollar index supports long positions in gold further with target levels at 16.78 and 17.18, the 38.2% and 50% Fibonacci level from August high 2011 to December lows respectively, and with strong support at 1.600.
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