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I have been following gold for a long time now, as we have been talking about how is one of the main reasons of dollar weakness. Before the metal broke the previous historical high of 1031, I draw a Fibonacci expansion in the daily chart, and if you take a look, levels had been acting quite well as support and resistance. Currently fighting the 138.2% level, around 1116, daily close above that zone will likely mean a continuation to next level, the 168.2% at 1134.
Also, take a look at indicators: ADX signal a strong trend, now around 55. In currency markets, I found out readings above 60 are extremely rare, yet in gold, not so rare. it could easily reach the 64/68 area before giving signs of exhaustion. Also, RSI in the daily at 77 is telling as gold is overbought. Yet, despite both indicators reaching extreme levels, there is no sign of a downside correction; if gold reaches quickly that 1134 level, and retreat strongly from there, we may have a first sign of that. Above 1134, likely to extend the rally, with 1200 as next key zone to consider. From current zone, a midterm corrective movement could be triggered under 1044, strong support level and 61.8% of the expansion. Watch for a reversal in indicators, and a daily candle opening under that level, to confirm a major downside move.
