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Thanks to yesterday’s session, gold bulls gained an important ally, but is it enough to go higher?

Technical Picture of the U.S. Currency
Looking at the daily chart, we see that although the U.S. currency moved a bit above the previously broken red horizontal line (based on the lower border of the orange consolidation about which you could read in previous Quick Gold Alerts) and the 200-day moving average during yesterday’s session, this improvement turned out to be quite temporary and the greenback finished the day below these resistances, invalidating the earlier breakout.This negative development lured the bears earlier today, which resulted in a test of Wednesday’s green gap (104.05-104.15). As you see, this very short-term support withstood the selling pressure, which translated into a reversal and a rebound in the following hours.Thanks to today’s upswing, the greenback came back above the mentioned resistances, which is a positive sign.But does it really change anything in the very short-term run?In my opinion, not yet because a similar situation we saw during yesterday. Nevertheless, we should keep in mind that the CCI and the Stochastic Oscillator generated buy signals, suggesting that further improvement may be just around the corner – especially if the U.S. dollar manages to finish today’s session above the mentioned resistances.What could happen if the bulls show strength?We’ll likely see an attack on Monday’s gap and an attempt to close it.What happened at the same time in the yellow metal?

Technical Picture of Gold
From today’s point of view, we see that thanks to yesterday’s upswing the buyers gained an important ally – a bullish engulfing candlestick pattern (marked with the green rectangle on the above chart), which would serve as the nearest support.This positive development encouraged the bulls to act before today’s U.S. market open, which resulted in a move above the upper border of the orange consolidation, the upper line of the very short-term green rising channel, and the 50% Fibonacci retracement (based on the entire late-May downward move).In this way, gold futures also tested the upper line of the red gap ($2,383-$2392.90) from May 23, but as you see on the chart, the combination of these key, very short-term resistances encouraged the bears to show their claws.As a result, the futures reversed and pulled back, invalidating the earlier small breakout above these key resistance lines, which doesn’t bode well for the bulls and further improvement. However, at this point, it is worth noting that the Stochastic Oscillator generated a buy signal, giving the buyers a reason to act soon.Will we see higher prices for the yellow metal in the coming days?In my opinion, such price action will be more likely and reliable only if we see a successful breakout and a daily closure above them.Summing up, gold futures moved higher earlier today, the combination of the key resistances stopped further improvement, triggering a pullback and an invalidation of the earlier small breakout. Such price action doesn’t bode well for the bulls, suggesting that further deterioration may be just around the corner.More By This Author:Dollar Breakout: Can Gold Bulls Hold The Line? Oil Bulls’ Failure And Its Implications Clues From The USD Index