By Mohammed Isah of fxtechstrategy.com
Gold futures took a break this past week from their recent declines and broke back into their longer rising trend line and through the Jan. 28 low at 1,073.95 to close the week higher at 1,093.30.
For a chart of gold futures
Gold futures still retain their broader downside bias, but the immediate risk is higher, and futures could target the Feb. 3 high at 1,125.00. A cap is expected there, which would turn the commodity back down again.
However, if that level breaks, we could see more momentum build toward the Jan. 20 high at 1,141.48.
On the downside, the 1,093.95/1,093.30 levels, representing the Jan. 28 low/trend line support, will come in as the initial support. A cut through there would leave the commodity to target its 2010 low at 1,044.20. A clean break below there would resume the short-term downtrend toward the 1,030.85/1,026.55 levels, the March 2008 high/Oct. 28 low, and then the 986.67 level, the October 2009 low.
On the whole, although gold still retains its broader weakness, the correction of its declines from 1,266.00 to 1,044.20 has been triggered, suggesting further upside risks.
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Mohammed Isah is a technical strategist and head of research at FXTechstrategy.com, a technical-research Web site. He has been trading and analyzing the foreign exchange market for the past seven years. He formerly traded stocks before crossing over to the forex market, where he worked for FXInstructor LLC as a technical analyst and head of research before joining FXTechstrategy.com. He has written extensively on the forex market and technical analysis and his articles have been featured in The Technical Analyst Magazine, The Forex Journal Magazine, The International Business Times and FXstreet.com. At FXTechstrategy.com, he writes daily, weekly and long-term technical commentaries on currencies and commodities, which are offered to its clients. He also produces
for his subscribers. He provides full coverage of the forex market with specific focus on G10 currencies as well as the commodities markets, with focus on five key commodities.