Here’s the daily chart of the gold futures this morning.
As has been the case for well over a year the daily moving average trends are up. That is the bedrock of the bullish case that has been in play over that time.
The pattern (awe, look at it’s sleepy happy face contentedly smiling at you) targets 1940 as long as gold holds the first support level. In NFTRH 601 we noted that gold needs to hold Friday’s low (yesterday it did and today it still does despite pre-market pressure) because it made a secondary lower high in April and a lower low to Friday’s low could mean temporarily shelving the 1940 target.
Finally, MACD is fine because it is positive, crossed down and doing what it should do in a consolidating market. But RSI has a clear negative divergence* at the most recent high. Is it indicating a non-overbought market with a lot of upside fuel or waning momentum that will result in a further pullback?
Regardless, this is a bullish chart and that would be the case even if the convergence of the rising SMA 200 and support around 1560 is tested. Gold already put on a hard test of the SMA 200 in March and is under no obligation to do it again.
* As to that divergence, it (TA) is art, not science. Don’t let TAs trick you into thinking the important things they see in their charts (“complex H&S” when trying to describe a freak multi-headed/shouldered H&S being my personal favorite) should be swallowed hook, line and sinker. They are the nerds in a spare room over by the copy machine and server closet. The real analysts (often no bright bulbs themselves) snicker and the jokes abound in the main office. It’s for a reason. TA is just a tool for probabilities management.
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