Gold bulls are powering the market higher early Monday, following Friday's large range bullish outside day. The yellow metal has smashed through declining bear trendline resistance and has climbed back above the 20-day moving average. The short-term technical bias is improving.
Taking a look at the daily chart, seen in Figure 1 below, Monday's early gains demonstrate follow-through and confirmation to Friday's bullish outside day (that forms when a market exceeds the previous day's high and low and closes higher on the day). The action marks the $1,272 level as strong nearby support.
On the upside, gold bulls pierced the April 28 minor swing high at $1,306.60—seen at Point A. That zone now becomes short-term support and must hold to keep the near term technical bias positive.
Another bullish technical factor is the market's push above the declining bear trendline drawn off the March 17 and April 14 daily highs, seen in red on Figure 1 below. Sustained gains above that declining trendline will target a quick test of the April 14 daily high at $1,331.40 —seen at Point B. Beyond there, an additional bullish objective lies at $1,360.20, the March 19 daily high and the bottom of an old gap on the chart.
Daily momentum is improving as well, with the relative strength index pointing higher.
Bottom line? The technical picture is turning positive. A myriad of short-term signals are turning bullish. But, the burden remains on the bulls to defend initial support at $1,306.60. If that holds looks for a test of $1,331.40 as soon as this week.
Orignal Post :- Kitco By Kira Brecht
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