Gold Strengthens and Prepares to Trend Again: Notable Test of the 200-Day EMA Support

Gold Forecast Video for 15.03.23 by Bruce Powers

Gold continues to blast higher following the breakout of a double bottom last week off the 200-Day EMA support area. It has quickly plowed through potential resistance zones noted last week and kept on going. This is bullish behavior which puts gold in site of breaching the most recent swing high at 1,960.

Inside Day Candle Signals Potential Breakout for Aggressive Traders

In the meantime, watch to see if today ends with an inside day. For aggressive traders a breakout of an inside day can be used for a signal. So far, today is shaping up as a bullish momentum doji hammer inside day candle. This is where the sellers took gold lower earlier in the session, but buyers stepped in to aggressively counter the sellers thereby bringing price back to or near the open. That flip in sentiment from bearish to bullish in one session has a chance to carryover to tomorrow.

If gold does continue to strengthen the next target zone is around 1,926 to 1,931 and consists of two Fibonacci target levels. That zone is then followed by the most recent swing high mentioned above at 1,960.

Recent Test of 200-Day EMA Support Reflects Expanding Bullish Sentiment

The recent test of the 200-Day EMA as support is notable in that it was really the first successful test since March 2020 and reflects expanding bullish sentiment in gold. Market participants widely follow the 200-Day line as an indication of the long-term trend. In general, the trend is bullish when above the line and bearish when below. Since it is a long-term indicator, the strength we’re starting to see is likely in its infancy. For over two years gold has been fluctuating above and below its 200-Day EMA. Now, it’s relationship to the 200-Day line is improving thereby increasing the likelihood that gold is getting prepped to trend again.

Fibonacci Retracement Levels Can be Watched for Support and Bullish Signals

If a pullback comes before further upside Fibonacci retracement levels can be watched for support and for bullish reversal signals. The first retracement is the 38.6% Fibonacci level at 1,874. It can be combined with recent weekly highs and lows from 1,870/1,869 price area. If the weekly low of 1,869 is broken a deeper retracement is likely in the works.

For a look at all of today’s economic events, check out our economic calendar.