Gold Fights for the Green May

May was a challenging month for the buyers on Gold. During the first half of the month we witnessed a strong drop but luckily for the bulls it was stopped and they managed to recover nicely from that, licking almost all of the wounds made earlier. Even despite the drop seen at the very beginning of the Monday, we still see a positive situation here.

First of all, we are still above all the major local supports. First one is the horizontal one on the 1262 USD/oz (orange), which was a resistance for the last two weeks. Second one is the upper line of the pennant/triangle (blue lines), which was locking the price in the sideways movement in the second half of May. The last one is the black down trendline, which was recently broken and according to the price action, should be now used as a support. So as long, as we stay above those three, we are obligated to look north. Not to mention the fact that recently we are making higher lows and higher highs and according to the the trend theory we should see a continuation of that.

The scenario for the next few days is in our opinion bullish. It will stay this way as long as traders will keep the price above those supports mentioned before. Going under will be the sign of the weakness and an official denial of the positive sentiment but now it is less likely to happen.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis