NEW YORK (
) -- As gold has halted its run to an all-time high of 1,070.37 and activated corrective pullbacks, all eyes are now on the 1,030.85 level, its 2008 high where a reversal of roles is expected.
This present decline is coming on the back of a loss of momentum at the 1,070.37 level on Oct. 14. Since then two failed retests were seen on Oct. 20 and Oct. 23 before the current weakness. Though gold remains biased to the upside medium to longer term, its present corrective down move is expected following its recent rally.
The proof of whether a top is now place will be determined by how it reacts at the 1,030 level and its long-term rising trendline currently at 991.50 drawn from the 681.72 level.
We believe the first defense at the 1,030 level should turn off the commodity if tested as a role reversal rule (a broken support turns to resistance) should play out here.
However, if gold snaps below that level, its minor support sitting at the 1,024 level will be targeted where a negation and penetration there will create scope for further downside pressure towards the 991.50 level.
The commodity remains supported by its daily statistics and RSI which are both bearish and pointing lower. On the other hand, to invalidate its current downside weakness, gold must break and hold above its all-time high at 1,070.37.
Beyond that level there is the big psycho level at 1,100 ahead of the 1,150 and then the 1,200 level. The latter level falls within our three months forecast.
Overall, Gold has triggered its longer term uptrend and should head further higher on completing its current corrective pullbacks.
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 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.