Gold: $1840 Level Holds Key To Potential Bullish Trend Platform
Anna Coulling | Nov 08, 2021 02:09PM ET
As the trading week begins, time to check in on the daily gold chart, following the previous volatile week for the precious metal, but one which ended with a positive finish. While the longer-term narrative remains unchanged, we could be in for an interesting and formative session.
The reason for this is not hard to understand if you follow my regular analysis, but for those who do not, it is the $1840 per ounce level that holds the key. But first, what happened last week?
Last Wednesday, Thursday, and Friday were key candle days, with the metal falling mid-week on good volume before price-based support came to the rescue during the final two days when the precious metal closed with wide spread up candles on rising volume.Gold closed well above the $1800 per ounce level to end at $1816.80 per ounce, clearing the resistance at $1810 per ounce denoted with the red dashed line of the accumulation and distribution indicator.
Now the question is whether this is going to provide the platform for an attack on the key $1840 per ounce level which is the ceiling that has to be breached. If it is breached, it's likely to define the longer-term direction for gold.
The reason this level is so important is twofold. First, it is a strong area of price resistance, with the metal having failed to break through in the past, in July, August, and September. But secondly, and just as significant between $1820 and $1840 per ounce, the volume on the VPOC histogram falls away dramatically into a low volume region. As such, it should therefore offer a path of low resistance from a volume perspective, and so provide the requisite platform to break out and develop a bullish trend.
Moving to the weekly chart we can see strong resistance immediately ahead, denoted with the red dashed line, so more obstacles to be overcome here too. But as with the daily chart, the volume on the VPOC histogram falls away as we move towards $1850 per ounce and beyond.
But for now, it’s one step at a time as we wait for an attack on the $1840 per ounce level.
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