Last Week’s High Identifies Resistance

Last week gold prices reached their highest value of 2019. Prior to that the record high this year was at approximately $1331, and was achieved on January 30. Gold pricing began the year trapped in a tight and narrow range between the highs at $1300 and the lows of $1275. On January 23^rd gold traded to its lowest closing price this year, and after reaching an intraday low of $1275, gold closed just shy of $1280.

The following day (January 24^th) gold spiked to the upper end of the range breaking 1300 and closing just shy of that price point. Over the next four trading days gold would trade to a new record high for the year, reaching $1331 on the last day of January.

That high held up until Wednesday of last week when gold reached a new yearly high of $1350. This is the highest price point gold has traded to since the first quarter of 2018, when gold attempted to breach $1370 per ounce on three separate occasions. Last year all attempts to breach that long-standing technical resistance area were unsuccessful, with the last attempt coming within two dollars and trading to a high of $1368.

That attempt also marked the beginning of a prolonged an extended correction which began in April of last year taking gold from those highs until it reached $1164 in mid-August the lowest trading point of last year.

That was also the beginning of a slow and methodical rally in which gold would spike to higher pricing and then consolidate and form a base at the new level. Gold would trade in the stairstep manner up until the middle of November.

November marked the beginning of the rally we are currently experiencing. The pace at which gold pricing gained value would substantially accelerate when in mid-November pricing broke above the 50-day moving average for the first time since April of last year. Beginning at $1200 gold ran roughly $150 to last week’s new record high. This rally has contained periods of price gains followed by extremely shallow retracements.

On February 13^th the last Golden cross occurred when the 100-day moving average crossed above the 200-day moving average. The result was the proper bullish alignment for three moving averages in which the 50 day is on top, followed by the 100 day, and completed with the 200-day moving average priced below.

What this indicates is that on a technical basis gold is fully engulfed with in a bullish cycle and could easily breach $1370- $1380 which has been the unobtainable brass ring since July 2017.

Wishing you as always, good trading,