Gold prices found support overnight in the wake of the Chinese key one year lending rate cut announcement of 108 points. Technically the chart patterns are looking constructive with the emergence of a “pennant” formation over the past week. A breakout to the upside of this pattern theoretically points to a move equally matching the height of the “flagpole”, which in this case amounts to around $90 equating to a target price in the $900 region. With the 9 and 40 day moving averages converging another bullish signal could be given if these two indicators cross. Pennant formations are not always continuation patterns and a failure to break upwards would point to a test of last weeks levels around $750.
The short term trend is bullish, medium term sideways and long term trend remains bearish.
Support: $807.95 (yesterdays low) Resistance: $848.50 (high of 16th October)
Support: $802.00 (low of 25th November) Resistance: $832.35 (high of 25th November)
Support: $780.35 (40 day moving average) Resistance: $823.23 (yesterday’s high