Here’s Why I’m Bullish Gold

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Here's Why I'm Bullish Gold

Daily Gold

While the longer-term outlook for gold continues to remain very bearish, in the last few days we have seen some encouraging signs for gold and while one swallow doesn’t a summer make, it will certainly bring some much needed relief to the relentless move lower. And the day in question is the 4th of September, perhaps unmemorable in terms of the price action, which saw gold trade around the $1200 per ounce area, but was significant in terms of the associated volume. On this day the price action closes with a relatively narrow spread down candle, but note the volume which is extremely high. This suggests one thing: the big operators have stepped in at this level to buy gold and so it’s no surprise to see the precious metal trading higher.

Support And Resistance

The key for any development away from this area is now the associated support and resistance levels, which are building firmly, with the ceiling of resistance now in place at $1220 per ounce and the floor of support at $1190 per ounce. These are based on price action from the accumulation and distribution indicator. The volume point of control histogram to the right of the chart is also not helping here, with high concentrations of volume from the current trading price at $1209.50 per ounce through to $1240 per ounce where we reach the first low volume node, so the precious metal has some way to travel before some easier areas are reached. This also coincides with the price resistance denoted with the red dotted line. An upwards journey with stiff areas of resistance to penetrate.

Here's Why I'm Bullish Gold

Gold

Staying with the daily chart, but applying Camarilla levels, this is also revealing with gold is now approaching and testing the R3 level at $1212 per ounce and signalling that a possible long position is now on the horizon. From there a move to R4 at $1217 per ounce and a close above would then open the way for a more sustained move to the R5 and finally to R6 at $1225 per ounce.

So in summary, one swallow perhaps, but nevertheless welcome and providing some respite to the longer term bearish trend!

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