April gold closed lower due to profit taking on Tuesday as it consolidates some of the rally off December's low. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.
If April extends the rally off December's low, the 50% retracement level of the September-December decline crossing at 1725.80 is the next upside target. Closes below the 20 day moving average crossing at 1625.60 would confirm that a short term top has been posted.
First resistance is Monday's high crossing at 1684.50. Second resistance is the 50% retracement level of the September-December decline crossing at 1725.80. First support is the 10 day moving average crossing at 1655.60. Second support is the 20 day moving average crossing at 1625.60.
We believe that gold is at the top of a trading cycle similar to what happened last year in September and November. We are reluctant to chase gold at these current levels. That factor along with our negative monthly Trade Triangle, continue to act as an inhibitor for this market on the upside.
With a Chart Analysis Score of +70, this market is in an emerging trend. Long term term traders should be in short positions in gold with appropriate money management stops. Intermediate term traders should be on the sidelines.
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