By Mohammed Isah of fxtechstrategy.com
Although gold futures closed marginally lower this week, the corrective recovery triggered off the 2010 low at 1,044.20 should lift the commodity higher, with the next upside target at the Jan. 20 high at 1,141.48.
to view a chart of gold futures.
The ability of the commodity to reverse most of its losses after declining to a low of 1,088.20 on Thursday remains supportive of this view.
Additionally, with gold now holding above its long-term rising trend line, further upside strength remains supportive of its long-term uptrend.
A decisive violation of the 1,141.48 level will create scope for further gains toward the 1,161.88 level, the Feb. 11 high, followed by the psychological level at 1,200 and then the 2009 high at 1.226.33.
The weekly stochastics have turned higher, supporting this view.
> > Bull or Bear? Vote in Our Poll
On the other hand, weakness, if seen, will target the 1,088.20 level, the Feb. 25 low, with a cut through there turning attention to the long-term rising trend line support at 1,062.83.
We would expect a cap at the latter level to turn the commodity back up again. However, if that level gives in, lower prices will develop toward the 2010 low at 1,044.20.
Overall, having halted its weakness off the 1,226.33 level and reversed strongly higher, risk continues to point higher toward the 1,141.48 and 1,161.88 levels.
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.