Gold Reaches Higher Highs As Dollar Weakens
Alexandros Yfantis | Oct 26, 2016 06:02AM ET
If you are following me on twitter (@alexanderyf) or just reading my analysis you will surely know by now that I have been a long-term bull in gold specially in the $1,100-$1,050 area and again here at $1,250 after the breakdown from $1,300. At the same time I have openly expressed my bearishness on the Dollar Index above 98.50, expecting at least a pullback if not a larger decline.
Gold has reached the important $1,250 support and has started making higher highs and higher lows after bottoming around $1,250. This is a very important support level for the longer-term view in gold. A break below it will open the way for a push towards $1,220-$1,150. However as long as gold is above $1,045 I believe a long-term low is in and that a push below $1,250 will be a gift for bulls.
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Short-term view still remains bullish expecting a push towards $1,280-$1,300 area.
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The Dollar Index has been giving bearish divergence warnings for several days and as I have been saying in my analysis, the upside is limited to a push towards 99.50 maximum. A reversal was to be expected. Price has given the first bearish reversal signals implying a push towards 98.40-97.80 at least.
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In the second chart though we see that price has reached the upper boundary of the long-term trading range that we are currently in. Support at 95 is critical for the medium-term trend. If it holds we could see new highs, but if it is broken I will expect the 92 level to be tested and most probably broken to the downside.
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