Gold breaks all major resistance levels, resumes upward journey

Gold carried on upside movement on Monday after breaking some very critical resistance levels last week, the yellow metal is expected to take retracement from current levels, as per price action analysis.

At the moment of writing in Asian session, bullion futures are being traded near $1325 an ounce with immediate hurdle seen around $1337 which is an important 61.8% fib level, ahead of $1360-$1375 resistance zone that is a historical supply area and 76.4% fib level. A break and daily close above $1375 shall expose new multi-month highs above $1400.

Gold breaks all major resistance levels, resumes upward journey

On downside, the precious metal is likely to find support near $1307 i.e. 50% fib level as shown in the above chart. A break and daily close below $1307 shall expose further downside movement up to $1291 -$1275 support area where both 200 Daily Moving Average (200 DMA) and 38.2% fib level are currently sitting in. The bias will remain bullish as far as the price is above $1237, the swing low of the previous wave.

Sharp buying sentiment was triggered in gold last week when a government report said that exports of China jumped by 10.6% in January, well above the market expectation of mere 2%. The unusual jump in exports spurred optimism about growth as the Asian nation is an export-based economy. Gold bulls always cheer every positive development about China, because the country is the biggest consumer of the precious metal.

Moreover, a series of negative economic reports about the US economy such as unexpected slump in January retail sales and surprise rise in initial jobless claims put the greenback under strong selling pressure, which in turn accelerated the bullish momentum in bullion price. The ongoing upward trend in the yellow metal is the biggest winning streak since the crash of April 2013.'
Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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