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Cutting through the £867 resistance?

Back at the start of February we wrote:

For the past few years, using the 200 daily moving average (DMA) as a guide for good support in the price of gold has been very useful…The most recent healthy correction will be no different. After reaching the £910 level we’re currently trading around £825 – more than a 9% pull back. But more importantly we’re now right up against the 200DMA

Since touching the 200DMA we’ve rallied 6% without pausing for much breath all the way back to around £867. We went on to write that after a strong midweek reversal in Gold the bulls seemed to be back in town. We added:

The £867 level we still need to be retaken to signal an attempt at the record high of £914 and might offer some stiff resistance at first blush.

There is some strong technical resistance at £867, especially after the speed of the move up off the lows. Crucially we’re now trading just above the 50DMA, a level that must be maintained in order for moving higher. However, we would not be surprised to see some consolidation around this level before making a sustained attempt to get above it.

But with North Africa burning in general and some horrendous images coming out of Libya in particular, the world is looking like a very uncertain place at the moment. The temptation for the safe haven play of gold might overwhelm any technical resistance. In the words of General Patton we might just cut through £867 “like crap through a goose”.

Whether we pause here, or blast higher quickly, it seems certain that gold’s steady march higher is back in swing. Expect the all time highs of around £915 to be taken out in the next 4-6 weeks, if not sooner.

Link to this article: : http://www.goldmadesimplenews.com/gold/cutting-through-the-867-resistance-3029/

Posted by on Feb 22 2011. Filed under Analysis, Gold News, Markets. You can follow any responses to this entry through the RSS 2.0. Responses are currently closed, but you can trackback from your own site.

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