Gold has opened with a gap up and it seems determined to jump above the near-term obstacles. It is trading at $1,686 and most likely will touch the $1,700 psychological level soon. The price is strongly bullish after Thursday's amazing rally, the gold price has managed to make another high and to take out a short term dynamic resistance, signaling that it should increase far above $1,703 previous high.
Gold is expected to extend its rally as long as the USD drops versus the other major currencies. The dollar is into a corrective phase as the USDX continues to decrease after the FED decision to add more stimulus measures to fight the COVID-19 pandemic effects.
Technically, the yellow metal has registered a valid breakout above the inside sliding line (sl) of the ascending pitchfork, so a further increase is natural. The next resistance is seen at the $1,700 level, but I believe that the price could ignore this level, the R1 ($1,702) and the $1,703 former high and it could approach and reach the upper median line (uml) of the minor ascending pitchfork.
The gold price will maintain a bullish outlook as long as it is traded above the $1,600 psychological level. The RSI indicator has managed to breakout above a downtrend line and now it moves higher, signaling a strong buyers.
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Gold is strongly bullish and it should approach and reach fresh new highs in the upcoming days. The aggressive breakout above the sliding line (sl) has confirmed a potential increase towards the upper median line (uml) of the ascending pitchfork.
However, the next target is seen at $1,700 - $1,703 area and at the weekly R1 ($1,702) level, so only a valid breakout above this area will validate a significant increase. A valid breakout above the near-term obstacles will announce a potential increase even towards the $1,800 psychological level and towards the weekly R2 ($1,828) level.
If you want to buy Gold, you should consider placing a Stop Loss somewhere below the $1,600 level, you could hide it below the $1,565 former low, because we cannot exclude a potential rejection from the $1,700 - $1,703 area on the short term before it registers a valid breakout.
The material has been provided by InstaForex Company - www.instaforex.com