Early in NY, gold prices were up .11% to $1,226.70 an ounce by 11:30 AM EST. Price action on the gold daily chart is attempting to have a third daily close above the 200-day SMA. The current rally is attempting to stretch its bullish streak to five days. Tentative resistance is coming from a bullish trendline that that started on November 7th.
If we see a tentative pause or pullback, key support may come from the 100-day SMA which is currently trading around the $1,209 area. If the bullish recovery resumes, we may not see any major resistance until the $1,260 area. If we do not see an immediate reversal, price could easily extend itself to $1,272 and possibly all the way to $1,300.
If downside momentum prevails and we see consecutive daily closes below the psychological $1,200 handle, $1,180 may provide key support.
The trade: Buy Gold at $1,227 with a stop loss at $1,217 and a take profit at $1,257. The Risk/Reward Ratio is 1: 3
Edward J. Moya
Senior Market Strategist
WorldWideMarkets Online Trading