Gold Technical Update
After a break below the wedge seen in the 4H chart, gold prices bottomed at 1603.55 and has recovered to a high of 1663.80 heading into the Tuesday US session. The momentum is bullish after the RSI tagged 70. As it hooks back up above 60 the bullish momentum is maintained. Price also broke above the 200 period simple moving average after consolidating below it for a couple of sessions.
The 4H chart sh0ows us that the current rally is cracking the 61.8% retracement 0f the recent d0wn swing fr0m 1694.85 to 1603.55. The 1660 handle is also near pivots seen within the sideways action gold has been in since September. The market is essentially range-bound in the medium term with a slight bearish bias, but is bullish in the short-term. The current rally above 1660 opens up the 78.6% retracement at 1675.31 to the 1678.20 pivot. Above that we can be heading back to test 1694.85 as well as the 1700 psychological resistance.
The short-term bullish scenario will become weak if the US session rejects the recovery and pushes gold prices below the 1640 level, which would also break below the rising channel seen in the 1H chart. It should probably find support near 1655 and the 200 SMA if the market is to confirm the bullish case toward 1675.31, 1678.20 and toward 1694.85, 1700.
Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.