Gold is trading in the green and it looks determined to approach fresh new high after yesterday's rally. I've said yesterday that the gold price is bullish and it should climb way higher as the global risk grows, no one knows when the COVID-19 pandemic will end and how big the economic recession will be.
We may have a good trading and investing opportunity if the price consolidates above the $1,700 psychological level. Gold is one of the most important investments these days, the high demand could send the price towards new highs. The US dollar is still bullish on the short term, but the yellow metal could resume the upside movement after the Oil crash.
Technically, the price has decreased a little after it has reached the upper median line (uml) of the ascending pitchfork. It has come back to retest the inside sliding line (sl), confirming it as strong dynamic support and now it could approach and reach the upper median line (uml) again.
Gold will be bullish as long as it stays above the sliding parallel line (sl) and above the $1,700 level, a failure to stay above could signal that the upside movement is finished and that we may have a corrective phase.
As I've said yesterday, the minor drop was somehow natural and expected after the last bullish momentum, the price has come down to recapture more bullish energy before it validates the breakout above the $1,700 level and above the R1 ($1,702) level.
- TRADING TIPS
Tuesday's false breakdown with great separation below the inside sliding line (sl) has signaled that the decrease is temporary and that we should prepare for another bullish momentum. Gold should increase as long as it stays above the $1,700 level and above the sliding line (sl - ascending dotted line), the first upside target remains at the upper median line (uml), while the second is seen at the $1,800 level.
If you want to buy gold, you should consider placing a Stop Loss below the $1,657 low to protect your investment. A further increase could be invalidated only if the price drops and stabilizes below the median line (ml) and below the downside sliding line (sl1).
A valid breakout above the upper median line (uml), another higher high, will validate a significant increase in the upcoming period.
