Gold prices jumped above during the second fortnight of January above an important resistance. It’s actually a strong signal for a bullish move on the medium-term.

There was indeed a strong resistance that contained the bullish price action in late December. Remember, the price action jumped during 2 months, between October 24 and December 29. It was a 30% rise that failed just below the level of US$ 900 an ounce.

Why did the positive trend end just below $900? Well, the resistance line was actually a strong technical barrier to clear. This resistance is an oblique line that goes through the lower highs (points B, C and E) posted since the historical high price of March 2008 (point A, when Gold price reached $1,057). Have a look at the chart: on early January the price action corrected 38.2% of its previous 2-months rise (between points D and E) after it failed to breakout above the resistance line. It fell back towards $800, (point F, which is a Fibonacci retracement level) and then immediately rose back to eventually clear this resistance on January 23.


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Since March 2008, several attempts to break the resistance line have failed. The fact that this line had been tested and validated several times strengthened it. The last attempt to break it succeeded: it has therefore opened the door to a new bullish trend.

As usual, previous resistances become new supports. This time this rule has been confirmed once again. A slight retracement in end of January drove the price action straight to this new support (point G). It means that the market has validated this level (here $875) as a new low.

That’s why the medium-term is clearly bullish. Now the price action is expected to test the previous high levels (points A, B and C). Since early December the technical Momentum indicator has been remaining above its 100 level. This does confirm that Gold prices are still well backed.