Gold prices are in a peculiar position – at least on the daily chart – in terms of short-term price resistance and indicator support.

Gold can’t stay between these levels for long, so it might be helpful to know them in advance of a breakout either way.

Let’s take a quick look at the levels to watch for the week ahead in gold:

The overhead resistance level rests at $1,160 which is a price resistance zone as shown above (red line).  There is ‘open air’ to the prior high at $1,225 on a break.

However, we haven’t gotten above that level yet – at least by the weekend – so watch $1,160 in the week ahead.

What about support?

There’s plenty of it on the daily chart.

First, we have the ‘arc’ trendline from which we bounced last week – it’s currently at the $1,140 level.

Otherwise, we have the 20 and 50 day EMAs – which haven’t been much help for the duration of the trading range (rectangle) in 2010.  For now, they rest at $1,140 and $1,126 respectively.

If the pattern is an ‘arc’ or ’rounded reversal,’ then we’ll likely see $1,225 in the weeks ahead, but if the pattern continues to be a rectangle, then we’ll see a move back down to test the $1,080 level potentially.

Per Mark Douglas’ teachings, we need to find key support and resistance areas as inflection points, because the market is either going to have to break them or stay within them.  We manage risk and opportunity accordingly.

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