Gold is showing indications of untidy gains in price with the probability of breaking over the critical long-term resistance level valued at close to $1,365 and may proceed towards $1,550.
Due to the untidy nature of gold’s uptrend as well as the inadequacy of confirmation from related commodities, traders may want to tread carefully in trading gold.
The uptrend started in the month of December in 2016. The movement has been described as unstable or a well-defined trend. The Guppy Multiple Moving Average indicator relationship is exhibiting a weak uptrend on the weekly chart.
The weakness may be due to the price of gold fluctuating significantly around the long term GMMA. This movement is taking place behind the scenes of a slowly climbing trend.
The status of the long term GMMA can provide indicators into what the investors are thinking. When the long term GMMA is compressed, it signals a weak investor support. Meanwhile, strong investor support for a trend is indicated by a broad and stable separation in the long term GMMA.
If the separation is not that wide, that may suggest that the investor support is not that strong for the rising trend.
Secondly, the next factor that contributes to the weakness of trend behavior is the uptrend line’s placement. This began from the low of December of 2016, however, the next anchor point did not surface until the month of January 2017.
The last factor that is adding to the unpredictability in gold uptrend is the behavior of the price of silver.
Investors and traders alike are closely monitoring for a breakout of more than $1,364 and the strengthening of the GMMA trend features. Although the lookout for a breakout is important, it is equally important to be alert for a drop below the trend line.