The rally in COMEX gold prices from $1,250 has gold bulls excited. After more than 2 years of falling prices is this finally the turnaround that gold bulls have been hoping for?
The gold chart doesn't give a clear answer but it sets key trigger points that allow traders to make a better decision. Let's start with the bearish view and look at features that suggest the rally is temporary and the downtrend will likely continue. There are three resistance features that can limit the rally.
The first is the value of the long-term downtrend line. The current value is near $1,320. The second is the value of the long-term Guppy Multiple Moving Average (GMMA). The upper edge of the long-term GMMA is near $1,350; this also acts as resistance. The third is near $1,390; gold developed a strong resistance near this level in September 2013 and March 2014.
Together these features suggest that the downtrend remains strong. The long-term group of averages in the GMMA indicator is well separated, while the long-term group of averages continues to move lower and does not show signs of compression.