by Kira McCaffrey Brecht:
While gold prices firmed overnight in Asia and European action, pre-New York trading has seen August Comex gold futures erase gains and push to slightly weaker levels, on the heels of a stronger U.S. dollar index.
August gold futures have posted a solid near term rally in recent days, climbing from the June 28 low at $1,179.40 to $1,297.20 on Thursday. The minor uptrend pattern is bullish.
But, for now, the bulls are being turned away by a stiff psychological resistance ceiling at $1,300—and that will remain the key near term zone for traders to monitor.
So-called "round-numbers" like $1,300 often act as both magnets for price action and also resistance. Also, the contract marked out minor congestive resistance on June 21 and 24, with daily highs right around $1,300.
Gold traders take note—this is the make-or-break level for gold over the next few days.
Additionally, gold may be forming another "triangle" or consolidation pattern on the daily chart. Recently, gold has a propensity for triangles. A large one formed during the April-June period, which presaged the latest down-leg. Triangles are generally continuation patterns (meaning the previous trend will continue upon a breakout), but sometimes they can act as tops or bottoms as well.
In this case, traders should monitor triangle trendline resistance and triangle trendline support, seen on Figure 1 below. An upside breakout would be bullish, while a downside breakout would mean a continuation of the primary bear trend. The time period on this triangle is fairly short as the apex is approaching. ...