Gold Technical Update
As risk aversion boosts the USD, XAU/USD or gold has been sliding sharply from a central pivot of 1666.50 to the current 1555 area. As the market falls sharply, we should remember that gold has been trading in a range roughly between 1802 resistance and 1522 support. To the left of the daily chart, we would have seen a support pivot of 1531.72 established in September 2011.
The RSI reading in the daily chart is dipping below 30. Last time the RSI was down here in December, we saw a bullish divergence (lower price low matched with higher RSI low) leading to a rally. The rally ended up developing a bearish divergence (higher price high matched with lower RSI high) before falling. Divergences are clues signs of a slowing trend. When the market is range-bound, it is an even more reliable signal for reversal.
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Fan Yang CMT is a forex trader, analyst, educator and main contributor for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.