Gold has made an impressive rebound after the disappointment of no QE3 in the United States. Many were expecting gold to easily test its recent lows of $1525. However, gold has proven to be resilient as it has made a series of high lows and has managed to change the price oscillator from failing to rising. One of my favorite bullish confirmations is when gold is above its 19 day EMA, which as of today has been accomplished. Looking at the chart below, past examples of closing above the 19 day EMA are a bullish signal that send gold into an uptrend that can last a minimum of a a few days to as long as a few months. Right now gold's Price Oscillator (19EMA-39EMA) is facing resistance from the trend line drawn (Price Oscillator is located below price). What you need to know about the Price Oscillator is that when it is rising it gives a bullish signal for price. The ideal situation would be for the Price Oscillator to be rising above 0, as past action has dictated that it is a signal of a very healthy uptrend. Being able to change the direction of the Price Oscillator is a bearish/bullish statement of who is in charge, so when it changes direction it is worth paying attention to.
Gold has lot to prove as its new uptrend is facing lots of resistance above as shown in the chart. One important resistance that is very close is the 150 day moving average (currently at $1652 and falling). When gold is above it, it ends up in a nice, smooth, long-term uptrend. It will be a huge statement if gold can break through and stay above its 150DMA. Gold's next test after the 150 day moving average is the very strong downtrend line that has kept gold from breaking its all time highs since August of 2011.
Gold has quite a bit of work to do, as this new uptrend signal has a lot to prove. One thing that appears more certain is that gold seems to have bottomed out.
Gold has quite a bit of work to do, as this new uptrend signal has a lot to prove. One thing that appears more certain is that gold seems to have bottomed out.
