Gold above its 200-day moving average but still signs to watch

People are getting excited about gold again, and no wonder since it broke above its 200-day moving average and that downtrending channel line. If long and watching the daily bars, you've got the StochRSI above the .80 line confirming your trend as long as it remains there (I've placed it on the 21-day setting for slower signals; you may prefer the standard 14). In fact, it's also above that line on the weekly chart. It can remain there without gold being overbought, especially when the other indicators (RSI, MACD and regular stochastics) are not showing an over-bought condition. Also, it is pushing the upper Bollinger Band on the daily chart, but given the channel traced out from the move up, the Bollinger Band alone isn't telling us that it's giving much resistance.

However, there remain Fibonacci resistance levels above, along with a shallower channel line and Bollinger Band levels on the daily and weekly that range around prior swing-high resistance. So I recommend keeping an eye on gold, especially if it moves under today's low. This is because today was a narrow-range day that nosed above 899 level that's the .618 retrace to the all-time highs. Losing this level could make it look like the correction so far was a leading expanding diagonal. If gold manages to move higher, then the 958 level is the .786 retrace that could be the next magnet and potential resistance/support level (although the 926 area is also a potentially important to watch, as a combination Fibonacci level converging with the shallower downtrend line).



Drilling down to the hourly chart using GLD, you can see that the StochRSI fell off at the end of the day, and the other indicators were overheated and smoothed off but haven't given a sell. The volumes on this hourly GLD chart don't show significant selling, but rather that buying kicked in with the rise over the 200-day MA. The pattern today flirts with a trap door reversal look, but with the volumes it can also be simply a play at filling the gap and no guarantee to a trader that trend reversal is imminent.


All in all, now that gold moved up in this fashion after that little head & shoulders played out, I'm not blowing the whistle on it but just putting out this reminder to keep an eye on it. Be careful out there, and happy trading all!