Gold has rallied, climbing as much as $1645 level in yesterday's trading session. However, it is still trapped below a very strong dynamic resistance. The yellow metal has taken advantage of the USD correction, the US dollar index has plunged from 102.98 level to 98.84 today's low.
The USDX is located now in a major support area. A reversal pattern is likely to send the rate higher again, signaling that the corrective phase is finished. USD appreciation could invoke another drop in gold in the short term. Still, I want to remind you that the gold price maintains a bullish perspective in the current COVID-19 epidemic, more and more traders and companies want to protect their money and to invest in a safe-haven instrument like gold.
The gold price has rebounded from the $1484 static support, I've said in my previous analysis that the outlook is bullish as long as gold is trading above this critical downside obstacle. The bullish engulfing and the lower median line (lml) retest from March 20 have confirmed another bullish momentum.
The price has ignored the $1555, $1600 levels and the median line (ml) of the minor ascending pitchfork, but the upside move was paused by the upper median line (UML) of the major orange descending pitchfork. The current upside movement towards the upper median line (UML) was natural after the price had failed to reach and retest the median line (ML), it has registered only a false breakdown with a huge separation.
We may have another long opportunity if the price makes a valid breakout above the upper median line (UML), so a breakout followed by a consolidation above the UML and above the median line (ml) of the minor dark blue ascending pitchfork will give us a chance to catch the potential further increase way above the 1703 former high.
A potential short term drop will be confirmed if the price closes below the median line (ml) and below the $1600 psychological level. This scenario may come true if gold fails to make a valid breakout above the UML and register only a false breakout above this dynamic resistance. The outlook is bullish as long as it stays within the ascending pitchfork's body, a rejection from the UML could signal a temporary drop, a major drop will be confirmed only below the $1484 level.
If gold will take out the upper median line (UML) resistance, it could resume the upside movement with a first target at the $1703 high, the second target is seen at the upper median line (uml) of the ascending pitchfork.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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