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Today’s Trading Edge: Gold’s technical breakout higher may target $1,260

Posted by Edward Moya on May 14, 2015 10:11:00 AM

WWM GOLD MAY 14 2015

As the U.S. dollar is trading at a four-month low, gold prices appear to be gaining strong momentum despite a strong bull market with stocks.  Historically, rising stock prices sway investors away from safe-haven trades such as gold. 

Price action on the gold daily chart shows that price is now tentatively skyrocketing above the 200-day SMA.  If the bullish stance keeps on going, key resistance may come from a potential bearish Gartley pattern at the $1,260 level. Point D is targeted by both the 70.7 Fibonacci retracement level of the X to A leg and the 161.8% Fibonacci expansion level of the B to C drop.  If this pattern is invalidated, further upside could target the $1,300 handle.     

If the U.S. dollar rebounds, the precious metal could pare its recent gains and find support from the $1,200 handle.   

The trade: Buy Gold at $1,222 with a stop loss at $1,215 and a take profit at $1,243.  The Risk/Reward Ratio is 1: 3

Edward J. Moya

Senior Market Strategist          

WorldWideMarkets Online Trading

Topics: commodities, gold, $GLD, economic policy

 

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