Gold has rebounded today and trades back above $1700. What next technically?

Buyers making a play on a sharp correction higher.

The price of gold is rebounding strongly today with a gain of $33 or 1496% of $1760.58. The there reached its lowest level since June 2020 yesterday $1676.89.  The low moved below the 61.8% retracement of the move up from the March 2020 low at $1689.89, but stalled ahead of the swing low from June 2020 at $1670.98.

Buyers making a play on a sharp correction higher.

Drilling to the hourly chart below, the price bounce has now moved back above its 100 hour moving average (blue line currently at $1701.58). The price tested that moving average line and found support buyers after the break, and moved back up toward its 200 hour moving average target (green line) currently at $1722.63. The high price so far has reached $1720.61. A move above that moving average would open the door for a test of a 38.2% retracement of the move down from the February 23 swing high. That level comes in at $1730.04.

Gold on the hourly chart
The buyers are in play with the move above the 100 hour MA, but there is work to be done.  Getting back above the 200 hour moving average – and staying above – is step one. Step 2 is to get back above the 38.2% retracement at $1730.04.  If the sellers lean against the 200 hour MA instead, and the 100 hour MA is rebroken, all bets of a bottom in place is off.  

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Categorized as Forex

By Jonathan Prop

Jonathan Prop is an independent financial advisor. He has been working in finance for the last 20 years. After retiring early in his 40s, Jonathan decided to help others get to grip with financial markets, particularly his area of expertise - forex!

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