The price of Gold, on the D1 time-frame, made a short-lived downward shift until March 16 when a lower bottom was recorded at 1451.13. Buyers found the price attractive at that level and took control of the market.
After the bottom at 1451.13, the market rushed through the 15 and 34 Simple Moving Averages and the Momentum Oscillator pierced the zero baseline into positive terrain. This might have warned technical traders of a likely price reversal or early formation of a new trend.
The possible reversal was supported by a series of Strong Bullish Japanese Candlesticks that occurred during the upward market drive.
A probable critical resistance level formed when a top was recorded on March 26 at 1644.37. Bears then tried to drive the market lower but after forming a bottom on April 1 at 1569.35, bulls overcame the selling pressure and the market surged upwards again.
On April 6, the Gold market broke through the critical resistance level at 1644.37 and three possible price targets were calculated from there. Applying the Fibonacci tool to the top of the resistance level at 1644.37 and dragging it to the support level at 1569.35, the following targets were calculated: The first target was estimated at 1690.73 (161 %) and the target has been breached on April 13. The second price target is calculated at 1765.75 (261.8%) and the third target is projected at 1887.13 (423.6%).
If the 1569.35 support level or one of the subsequent higher bottoms formed by the current uptrend are broken, the above anticipated price targets are therefore nullified.
As long as the price continues making higher tops and bottoms, thus confirming an uptrend is in place and demand is overcoming supply, the outlook for Gold on the Daily time-frame will remain bullish.
Written by Theunis Kruger, FX Trainer at FXTM