Monthly Chart (Primary Trend)
1. The exponential moving average is a trend-following indicator.
2. Gold's green 5-month EMA is above its orange 10-month EMA.
3. This puts the EMAs into bullish mode.
4. The monthly RSI is on the bullish side of 50 (blue rectangle).
5. The suggests a bullish momentum is supporting the precious metal's primary trend.
6. The monthly chart serves as an indication of gold's primary trend and is the main determinant of trend direction.
Weekly Chart (Bullish Wedge Pattern)
1. Gold's weekly chart shows a series of rising troughs followed by rising peaks.
2. This puts the precious metal's weekly chart into a defined uptrend.
3. The price action between HP* and HT* shows a falling wedge.
4. This is a bullish continuation pattern.
5. We can derive a measured moved (vertical green dashed lines) to assess a possible upside target for gold.
6. The falling wedge pattern gives an upside target of $2,225.
7. Measured moves are academic – they may or may not be hit. However, they do suggest the bullish nature of the pattern.
8. The weekly RSI is above 50 (blue rectangle), but only marginally so.
9. If the price target is to be hit, the RSI needs to maintain above 50 for a sustained period
Daily Chart (Pullback to 61.8% Fibonacci)
1. Gold's daily chart shows a loss of upside momentum.
2. Its green 5-day EMA is below its orange 10-day EMA, and the daily RSI is below 50 (blue rectangle).
3. This is a downside bias and may be suggestive of a proverbial dip in an uptrend.
4. However, for this to be so, support will need to hold.
5. To this end, we note that price has pulled back to a confluence of support.
6. This includes the 61.8% Fibonacci retracement (blue horizontal), overlapping with price support (green horizontal).
7. For the "dip in an uptrend" scenario to unfold, we will need to see a golden cross by the EMAs, with the green 5-day EMA crossing bullishly above the orange 10-day EMA, and the RSI will need to pop above 50 and hold.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.