Gold May Rally To 1340 – 1345

Gold has been developing within a consolidation and a trend channel that is about 150 – 160 pips wide since 3rd January and it seems that it has headed for the resistance which is around 1326 – 1328. The channel is particularly obvious on the H4 time frame (in red).

At the same time it should be noted that RSI has formed a divergence (in blue) and that the indicator has broken out above the divergence line.

These are two significant signals that there may be a breakout above the channel and a rally to 1340 – 1345.

An alternate scenario to the downside is possible, I think, only if Gold breaks out below the trend channel (in red) and remains below it.