Gold has been consolidating in a channel between USD 1240 – 1265 since the last US jobs report (NFP October 7). This consolidation was around the long term 200 DMA at 1256. The yellow metal has spent nine consecutive days below this important support level, suggesting longer term weakness. However, the breach and break of this key level and with a third consecutive up candle triggered a LONG position at USD 1267.00 on yesterdays (October 19) close. Should this move prove a true break out then an immediate short term Target 1 is at USD 1281.00, north of the 23.6 Fib level and close to the 20 DMA. Target 2 is at the 38.2 Fib level USD 1292.00 and longer term Target 3 would return Gold to north of 1300 at USD 1305.00.
The move back to 1300 level would suggest a weakening USD which is not evident at the moment. The Parabolic SAR remains negative, and the break out could fail as the RSI and Stochastics remains neutral.
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