Gold: Bulls crossed up the psychological level $1600, what next?

Overview:-  Yesterday finally gold given a massive rally during the US session where it was already expected from the bulls, as we have mentioned in our previous report last week to go for buy around 1574-75 for target of $1590  and $1600 level with strict stop loss of $1560 level, every dip should be convert as buying opportunity. Our both targets have been achieved so we are expecting that our readers must have made profit from this move which is providing us bullish signal.

Earlier yellow metal was trading and moving in very narrow range where both bulls and bears are trying their best to take at their own side but last week we got a bullish signal which was an early phase and picked up the call to buy the gold for $1600 level. Well $1600 level is a psychological level and from here we are expecting that gold will move up towards upside further and it’s just a starting further rally is awaited.

Today at the time of writing, yellow metal is surviving above $1600 level which is itself a bullish signal on the charts.

Fundamental Analysis:-  What’s particularly noteworthy is that both gold and US dollar are reported a weekly gain. The dollar index, which tracks the value of the greenback, has ended higher for the third straight week. Investors usually pull out money from the gold market during bouts of dollar strength. This time, however, gold has turned a blind eye toward the rise in the greenback. The price action is indicative of the underlying bullish sentiment in the gold market.

Technical Analysis: – From technical prospective we can see that gold jumped 1.32% on Tuesday, confirming an upside break of the six-week-long narrowing price range or the pennant pattern on the daily chart. The breakout indicates the rally from November lows near $1,445 has resumed. Tuesday’s close also invalidated the bearish lower high of $1,593.90 established on Feb. 3. Additionally, the 50day EMA and 200day SMA lines are trending north, indicating a strong upward momentum and the relative strength index has breached the descending trend line in favor of the bulls.

All in all, the metal looks set to test the 2020 high of $1,611 reached on Jan. 8. The bullish case would be invalidated if prices find re-enter the pennant pattern with a drop below $1,580. Also, a bullish flag pattern has been posted on the hourly chart which has been completed and a recent development from yesterday’s price action. Short term to intermediate term trend is up so in an uptrend market buy on dips will be profitable strategy and the way bulls are reacting it seems like we got the perfect trend to initiate the long position. Overall gold is trading above all the major and minor EMA lines, which is providing us bullish signal, however we will get further bullish signal above $1580 level.

Odds are in favor of bulls and daily to weekly bias remains bullish on gold as long as $1580 level remains intact. A bullish crossover on the MACD indicator is a recent development and RSI is turned upside above 50 level, so we may see some correction but this correction should be taken as buying opportunity.

The bulls are dominating the bears and leading in the game.  Bulls are playing at front foot and it seems like bulls are going to continue with this game and will not provide any chance to bears. On contrary a daily closing below $1580 level will change the outlook from bullish to bearish.

What next:-  Yellow metal is trading and sustaining above minor and major EMA lines which is providing strength to the bulls. The $1590 level can be considered as key support level followed by $1580 where $1620 is a key resistance level followed by $1640 level.

Trade idea:- Based on the chart and study above we would suggest that traders may go for buy around 1600-02 for target of $1620  and $1640 level with strict stop loss of $1580 level, every dip should be convert as buying opportunity.

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