Gold Walks Along our 1st Tier Uptrend Line

Gold continues to find solace in our 1st tier uptrend line amid weakness. We’ve witnessed 4 consecutive bounces on our 1st tire uptrend line this month as the EUR/USD inches higher. Gold has built a beautiful head and shoulders pattern in the process with key economic data releases on deck. We notice similar anticipation in the EUR/USD and GBP/USD as the currency pairs consolidate with trend lines converging. Hence, it seems the markets could be in for some volatility as the week wears on. The UK and U.S. will release pricing data over the next two sessions and China will highlight the week during Thursday’s Asia trading session with the release of GPD and Industrial Production. That being said, investors shouldn’t get complacent during period of relative inactivity since the markets should heat up soon.

Technically speaking, gold has multiple uptrend lines serving as technical cushions along with 1/13, 1/8, 1/5 lows. We recognize that gold has built a neckline along our 4th tier uptrend line. Hence, a movement below our 4th tier could result in a large step lower. Meanwhile, gold’s psychological $1150/oz area should continue to play a role for the near-term. As for the topside, gold faces technical barriers in the form of 1/7 and 11/18, 11/23, and 11/27 highs along with the psychological $1175/oz level.

Present Price: $1136.00/oz

Resistances: $1136.38, $1138.89/oz, $1141.39/oz, $1145.47/oz, $1148.91/oz, $1153.61/oz

Supports: $1130.43/oz, $1127.30/oz, $1124.48/oz, $1120.41/oz, $1117.27/oz, $1114.45/oz

Psychological: $1150/oz, $1100/oz, January and December highs, January lows