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Gold Breaks 2-Week Range and Signals Bullish Continuation

Gold priced in US Dollar (XAU/USD) has been ranging roughly between 1306 and 1325 for the past couple of weeks. Today, as we begin the 7/1 trading session, it rallied above the range high of 1325.

(gold 4h chart, 7/1)

The 4H chart shows that gold has been bullish in June, rallying from 1241. The 200-, 100, and 50- 4H moving averages have turned to a positive slope and are now in bullish alignment. The RSI has tagged above 70, even above 80, while holding above 40 in pullbacks. This reflects strong and persistent bullish momentum.

The range breakout today is thus a bullish signal. However, we can see resistance around 1331 in the daily chart. This challenges the bullish breakout, and some traders will think the market is overbought based on the RSI reading in the daily chart. While a pullback is definitely possible, the RSI reading can stay elevated in a bullish market. In February and March, gold rallied with brief pullbacks, and kept the RSI above 60, close to and sometimes above 70. 

(gold daily chart, 7/1)