Gold 1 OZ (XAU=X) Breaks Out to Fresh 7-Year Highs

Gold 1 OZ (XAU=X) Breaks Out to Fresh 7-Year Highs

Gold 1 OZ (XAU=X) Breaks Out to Fresh 7-Year Highs

Gold prices hit fresh 7-year highs rising above 1,623 and settling near 1,619. This comes despite a surge in the US dollar which nearly hit 100 on the dollar index for the first time since 2012.  Historically, as the dollar increases in value, gold prices moderate. This is because the gold benchmarks are priced in dollar, and as the dollar rises, gold prices generally moderate to incorporate the higher cost for gold using currencies other than the greenback. Initial jobless claims increased slightly but still remain near multi-year lows.

Technical analysis

Gold prices rally of the 5th time in 6-trading session. Prices have broken through the January highs at 1,611 and are targeting the January 2013 highs at 1,673. Support on the yellow metal is seen near the 10-day moving average at 1,585. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line. The MACD histogram has moved above the zero-index level which is also a buy signal. The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices.

The relative strength index (RSI) is moving higher pushing above the overbought trigger level of 70 which reflects accelerating positive momentum but also could signify a potential correction. The continued acceleration of the RSI is important as prices are breaking out.

Technical Indicators

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 1,550.26.

The projected upper bound is: 1,675.78.

The projected lower bound is: 1,617.56.

The projected closing price is: 1,646.67.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 33 white candles and 16 black candles for a net of 17 white candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 93.6272. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 18 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 76.56. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 18 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 198.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 4 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 3 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed up 23.910 at 1,643.316. Volume was -0% below average (neutral) and Bollinger Bands were 48% wider than normal.

Open     High      Low     Close     Volume___
1,619.4051,648.7551,618.6001,643.316 0
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1,592.16 1,550.57 1,474.07
Volatility: 11 12 15
Volume: 0 0 0

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

PREC.M.XAU= is currently 11.5% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect very strong flows of volume into XAU= (bullish). Our trend forecasting oscillators are currently bullish on XAU= and have had this outlook for the last 2 periods. Our momentum oscillator is currently indicating that XAU= is currently in an overbought condition.

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