By Mohammed Isah of fxtechstrategy.com
Gold futures may be shaping up to move higher again after weakening for two weeks in a row.
With hammer-triggered weakness closing flat to form a doji candle this past week (
to view chart), gold futures may have put in a temporary bottom at the 1,094.63 level, the Dec. 17 low. That suggests a follow-through higher toward the 141.68 level, the Dec. 17 high.
A cut through there would set the stage for a move higher targeting the Dec. 8 high at 1,168.85, then the Nov. 26 high at 1,195.07 and lastly the all-time high at 1,226.37.
If futures can move beyond the all-time high, they will resume their longer-term uptrend.
However, if a corrective upward move fails to be triggered, futures will target the 1,094 level. A turn below there would pave the way for the resumption of the declines off the 1,226.37 level toward the 1,070.80 level, the Oct. 14 high, before the 1,032.60 level, the March 2009 high.
The weekly relative strength index is supportive of this view as it is bearish and pointing lower. On the whole, though still vulnerable to the downside, Gold looks to initiate a corrective recovery following its doji candle formation.
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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.