Day two: our potential spot gold trade

The daily chart has failed to provide me with the sell signal that was threatening to materialise on Friday. 

In fact price action is very bullish with gold convincingly closing above the 61.8% retracement of the August to December sell-off at $1338. Traders will now be eyeing a break of the October high of $1361, which is just ahead of the 2012 downtrend at $1363. A break of these levels in the coming days will be very bullish and lead the commodity to a test of $1374.

A look at the stochastic on the daily chart shows another bullish development, with the oscillator threatening to break below the 80 level, however there has been a modest bounce off this level instead. This suggests a continuation of the trend, and with the MACD still well above zero this should be seen as a positive development.

The hourly chart has started to look a touch more bearish, with the stochastic breaking below the 80 level and the MACD trading through the signal line. This suggests to me we could see a bit of profit taking to the $1345 to $1335 area. However as said, the daily chart suggests dips will present themselves as buying opportunities.

Spot Gold
IG Charts

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