Gold Technical Update
Gold has been consolidating since last week after it feel to 1666. Since then, we are observing an ABC correction in the 4H chart. The rally has so far completed wave equality of C=A, and pushed the RSI to 60, a break above which signifies loss of bearish momentum. For a bearish market, the RSI should find resistance here to maintain the downside momentum. On top of that we have the 38.2% retracement (of the 1802.70 - 1666.45 swing) here at 1718.50, reinforced by a previous consolidation during Nov. 17th and 18th before breaking lower on the 21st. Finally, we are also testing the 200 period simple moving average. If resistance is found here, and a strong bearish attempt follows, the market would be in a sling-shot, with bearish implication first back to the 1666 low, then toward the 1600 low seen in the daily chart, which will be testing the 200 day SMA.
1718.50 is an important resistance cluster, but if the market extends the corrective rally, the next important resistance cluster is near 1735. 50% retracement, declining channel resistance, and also a previous pivot. Then a break above 1750 (61.8% retracement) would really shelve the bearish outlook and open the 1800 high with prospect for 1900+ as well.
Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.