Gold is Showing Some Signs of Life

Gold is not out of the woods yet with the current downtrend in its fifth month, however, I’m seeing some signs of life in the metal. This past week there were a couple bullish candles, but even more impressive was that an upper resistance line was pierced. This resistance line could now turn into a support line. I’d prefer to have the upper trend line near 1230 break first though to feel more comfortable with this move.

If the 1230 area does break, looking at Fibonacci retracement levels, we can see the next target areas to watch. They are at 1244 and 1288 for 38.2% and 50% retracement levels of the move that started in April and had a low in mid- August.

Looking forward into the rest of the month, option expiration day is the day before the FOMC announcement, which could give us some extra actviity. For the past few interest rate hikes, gold has tended to decline leading into the announcement. We’ll have to wait and see what happens this time. Meanwhile, watching the trend lines in place which have had multiples tests, giving them a little more significance each time they are held (or broken in this recent week) can be used as a daily guide.