Paper gold rallied for the 2nd day and price managed to break out from the recent downtrend channel. RSI is back above over-sold levels and stochastic completed a bullish cross of the over-sold 20 level from an embedded state (3 days below 20.) The initial price target when stochastic loses embedded status is the nearest moving average, in this case the 18 day at 1613. All moving averages are aligned as resistance from the shortest duration to the longest, the most bearish configuration possible. I expect initial resistance at around the 1613 area and then stiff resistance at 1625. Support is the most recent swing low at 1526. 1600 must be taken out with the formation of a higher high to nullify the current downtrend.
The expanded chart shows the major levels of chart resistance that exists all the way back up to 1792. The significance of 1625 resistance can be better appreciated on this chart. RSI is approaching the downtrend line once again and look here for an early indication of reversal. The divergence in MACD was confirmed with the V bottom reversal and the hammer candle of last Wednesday. Divergence is a powerful tool that lets you know early that the market is thinking about reversal. Support at 1525 looks to be very strong. A double bottom reversal yields a projection of 2050.