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Analysis

Chart of the week – Gold bullish breakout, further potential upside

gold

Chart of the week – Gold 

Gold bullish breakout, further potential upside

Short to medium-term technical analysis

Time stamped: 20 Feb 2022 at 11:00am SGT (click to enlarge chart)

Source: CMC Markets

  • Gold (cash) has managed to stage a weekly bullish breakout (trigged last week) from a 14-month major basing formation’s descending trendline resistance in place since November 2020 high. Prior corrective declines that have occurred within the major basing formation have managed to be supported by the 100-week moving average.
  • In the short-term, the price actions of Gold (cash) have staged an acceleration to the upside from its 28 January 2022 low of 1,780 and rallied by 6.85% to print a recent high of 1,902 on 18 February 2022. The 4-hour RSI has reached its overbought zone but no clear signs of bearish divergence yet. These observations suggest that the short-term uptrend phase from 28 January 2022 low remains intact.
  • Watch the 1,874 key medium-term pivotal support (also the 34-period moving average on the 4-hour chart) to maintain a potential impulsive up move sequence towards the next resistances at 1,916 and 1,943/1,948 (a cluster of Fibonacci expansion levels).
  • On the other hand, a break with a 4-hour close below 1,874 negates the bullish tone for a multi-week corrective decline towards the next support at 1,848 (also the pull-back support of the former major descending trendline from November 2020 high) within its medium-term uptrend phase that is still evolving since 16 December 2021 low of 1,753.


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