Gold Bullish Divergence

In the previous post about Gold I wrote that the price reached a possible reversal zone at the uptrend line on the weekly time frame. You can read this post for more details, just click on the link in the related ideas below this post. If we look at the daily chart, we can see a buy signal based on a bullish divergence. The price bounces from 1220.00 level and RSI confirms the price reversal in the oversold zone. MACD histogram supports the possible upward movement. DMI is still bearish and confirms the strength of sellers and that's why we should use pending orders and a breakout signal for buying. If price moves above the resistance zone formed by the weekly uptrend line, SMA20 and 1240.00 resistance level, we'll get additional signal confirming the upward movement. Entry level should be above 1245.00 with stop orders below the local swing low at 1210.00 level. The main profit target should be at 1300.00 level. If the price breaks this resistance, the next target will be 1350.00 level.

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Comment:

1220.00 level still holds the market. The trading idea is workable.