Spot Gold Price Chart 12 Feb 2010

Yesterday’s wide spread up candle on the daily spot gold chart once again gave some encouragement to the gold bugs, ending the trading session breaking and holding above both the 9 and 14 day moving averages but failing to breach the 40 day which now sits immediately above.   However, the upwards rally of the last few days is still very fragile and could well reverse at any point, particularly if we see a shooting star or bearish engulfing candle as we run into the underbelly of resistance in the $1120 per ounce region coupled with the 40 day moving average above.  The reason the current rally looks weak is that technically we have a series of lower highs of which this could be the third and therefore until we see a break and hold above the $1150 per ounce region it is impossible, at present, to trade the long side with any confidence.

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