Gold touches one-year high, what's next

Technical Analysis

Author: Adam Button | gold

Gold prices have gone parabolic

There is no better sign about the fear in markets and the lack of confidence in central banks than the gold chart at the moment.

Prices have risen for 10 consecutive days, culminating in a 3.65% surge today.

What's the rule of thumb in a parabolic market? It's to hang on for dear life.

Naturally, it's way overbought and it's always tempting to close out longs on a big spike after a 10-day jump. Short-term traders might want to do just that.

It's up 18% in 40 sessions and the most overbought since 1999 with the daily RSI at 85.5.

I've been in this trade since Jan 20 and I think gold can go much higher. With the downtrend out of the way, the next stop isn't until $1310. I suspect we will see a retest of $1205 before we get there, so that's where I'll be looking to add. 

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