Best Financial Markets Analysis ArticleLast week gold rallied away from the danger zone, leaving behind a fine small Double bottom on its chart, and it is now shaping up to begin a strong run. On the 6-month chart we can see that gold honored the support described as being of key importance in the last update, rallying away from its early April low and its 200-day moving average to approach the return line of the downtrend channel shown. This is positive action that has created a cushion for those long gold.
Although it has yet to break out from the downtrend, the completion of the Double Bottom and the bullish MACD cross through its moving average shown at the bottom of the chart is a clear sign that such a breakout is probably pending. Gold is now somewhat overbought after its gains of last week, so it is quite likely that it will back off from the upper red trendline before breaking out, although there is no guarantee of this. Once it does break out, a rapid advance to challenge the highs is to be expected. Note that the intraday spike down on Friday did not occur - it is a data error. Possible tactics for would-be buyers include buying on a pullback from the red return line, or waiting for the breakout and then buying on a pullback towards the trendline, should one occur.
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