RMS

I wanted to highlight the ASX gold stock which I felt demonstrated the strongest demand-supply response to today's catalyst of higher gold prices.

RMS's Thursday candle is attractive due to the opening gap up – nothing speaks of highly motivated excess demand than a large opening gap up, but also due to the long white candle and close at the high of the session. Again, each is a great indicator of unquenched and motivated excess demand.

Technical analysts look for exactly these signals to help them understand the probabilities around a rise/fall in a stock's price. Typically, the greater the showing of excess demand, the greater the probability the price will continue to reflect this going forward.

But, candles are only indicative of the next few periods at best. Longer term indicators such as the trend ribbons and price action help the technical analyst to understand longer term manifestations of excess demand or excess supply.

There are some encouraging signs here as well. The short term uptrend has re-established, and the price is bouncing strongly off the long term uptrend ribbon, confirming it is acting as dynamic support.

The price action is rising peaks and rising troughs, which indicates a buy the dip mentality among market participants.

It's unlikely to be all plain sailing for RMS though, as I note the major historical supply point of 1.785 is approaching. It's worth watching the price action and candles here closely. A continuance of the current price action as well as white candles would signal a higher probability of a break out of this key level.

Support moves to 1.635. The short term trend remains up as long as the price continues to close above this point.