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Bullish Digestion for Gold, Euro


Spot gold continues to respect the integrity of its up-slanted channel off of the Dec 29 corrective low at $1522.48.  As long as the lower channel support line remains intact in the vicinity of $1700, the uptrend channel will continue to dictate the directional action of gold.

Today's low at $1711.57 could be the conclusion of a pullback off of last Fridays high at $1763.71. A climb above $1730 is needed to trigger initial confirmation that $1711.57 ended the latest correction, and that a new upleg within the channel has started.

Meanwhile, let's also notice that EUR/USD pressed right to test last Wednesday's pullback low at 1.3025 and managed to hold that level prior to pivoting to the upside to 1.3120/30.  This left behind a small but potentially important Double Bottom corrective low.

As long as 1.3025 contains any forthcoming weakness, my pattern work argues that all of the action off of the Jan 29 high at 1.3235 represents a bullish digestion period, in preparation for a thrust to the upside that projects next to 1.3330/60.

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