It's about time for a gold rally.
After the bullish setup we saw two weeks ago, it was disappointing to see the precious metal decline and nearly take out support at $1,210 per ounce. That would have shifted the short-term view to bearish.
But it didn't happen.
Gold managed to hold above its support line. And it bounced back strongly – to the point where anyone who bought the metal on my recommendation last month is now showing a profit on the trade.
And there are even more gains ahead...
In November, we looked at a weekly chart of gold and the positive setup in the MACD indicator. Today, we're looking at the daily pattern. And it's bullish. Take a look...
Gold has broken out to the upside of a bullish falling-wedge pattern. And it has done so with a positive cross on the MACD, a momentum indicator.
Without getting too complicated, when the black line crosses over the red line, it's bullish. The red arrows point to where that bullish cross occurred over the past few months. Each time, it led to a short-term move higher for gold. We should see something similar this time as well.
Of course, we can't rule out a possible retest of the former resistance line of the wedge pattern around $1,230 per ounce.
But that pullback will be a buying opportunity.
Gold should rally to at least the first red resistance line near $1,290 per ounce. And there's a good chance we could see the metal get back up to the second resistance line above $1,350.
The weekly chart of gold remains bullish. And now we have the daily chart jumping into the bullish camp. So it looks like more gains are in store for the metal.
Traders should hold onto their gold and add to their positions on any pullback toward $1,230 per ounce.