We have seen large rallies in gold in two of the past three sessions and we are prepared to say that the correction in gold has run its course and that the commodity is ready to resume its rally.
Gold Daily Since Oct.
Gold has rebounded after correcting from the all-time high of $1226 to $1070, which was just over the 38.2% retracement of the move from April to December. The correction was a healthy one, even if many would have liked to see something in the upper 900s before going long once again.
The rally in gold is one of the strongest trends in any market and the signal over two of the past three days has been solid. There is upcoming technical resistance at $1141.52 but if that is breached a re-test of the all time high is the favoured scenario.
Our chart shows the RSI, Bollinger Bands and Slow Stochastics. The RSI is bullish, it has risen to 60 after basing and it won’t be historically overbought until were in the mid-80s. The Bollinger Bands had contracted and now were are pushing against the upper Bol after a correction to the bottom. Look for it to ride the upper Bol like it did in Nov. The Stochastics do give some reason for pause, as we are already looking stretched but overall, the trend looks good.