FxWirePro: Gold bulls bounce back on hammer, more rallies likely on break-out of stiff resistance, bears bank on wedge support breach

Gold prices are surging higher today from the lows of $1,237.82 to the highs of $1,247.57, currently trading at $1,246.21 levels.

In this process, the bulls have managed to bounce back on hammer formation, the bullish pattern candle has occurred at $1,239.61 levels, consequently, rallies break-out the stiff resistance of 1245.77 levels (refer 1H chart).

Both leading oscillators (RSI and stochastic curves) show upward convergence to the prevailing rallies. For now, we could foresee more rallies likely to extend further on bullish SMA and MACD crossovers and intensified bullish momentum.

While bears in the intermediate trend breaches below rising wedge support at 1300 levels, where 7EMA crosses below 21EMA (refer weekly chart). Both RSI and stochastic curves show constant downward convergence to the price dips on this timeframe. Hence, the downtrend is most likely to prolong further on bearish EMA and MACD crossovers.

With the USD close to major resistance barriers in the form of internal 50% retracements at 96.04 in the USD Index and at 1.1449 in EURUSD, we now see a high probability that an intermediate USD setback is due shortly, which would particularly favour an intermediate recovery in the Precious metals sector.

However, we remain sceptical whether this recovery would be able to extend substantially as the expected USD setback will most likely only form a countertrend decline of 6-8 weeks’ duration within a much broader USD recovery.

It is wise to buy on dips on intraday trading grounds for the $1,250-$1,260 levels.

Currency Strength Index: FxWirePro's hourly USD spot index is inching towards -41 levels (which is bearish), while articulating at (10:43 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex

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