Gold Technical Update
Gold is seen bearish in the 1H chart. The market is trading below the 200-H simple moving average, and the RSI has tagged 30, and failed to break above 60, now returning toward 30. We are also trading in a declining channel. This bearish market is now knocking at a support cluster. 1)Channel support at about 1745. 2) Lower Bollinger Band (around 200SMA), 3) pivot zone seen more clearly in the 4H chart. Note that the 4H RSI is also at 40, a support if the market is to maintain its bullish momentum. However, the upside should be first limited to the 1800 level in considering of further correction. In fact, when considering further corrective declines, we should anticipate the upside to be below the highs, near the 1770 pivot area. .
If instead, the market closes below 1740, we have a double top formation seen in the 4H chart. The double top would be confirmed if a pullback - possibly from from the 38.2% retracement at 1726.62 respects the 1750 area as resistance. This 1726.62, 38.2% retracement is reinforced by pivots seen late October (shoulders of a failed head and shoulder), and is why we are anticipating a pullback from that.
A confirmed double top opens up the 1700 level. 1703 is about 50% retracement of the 1603-1802 swing. We have support going down to the 1679, 61.8% retracement level. A break below that opens up the low near 1603.
Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.