Technical Analysis – Gold corrects downwards; will bullish run resume?
January 4, 2018 1:25 pm
Gold had edged lower since Wednesday’s trading session as the recovery of the greenback caused the sell-off of the metal. The price had posted an aggressive bullish run during the previous three weeks following the rebound on the 1236 support level, which overlaps with the ascending trend line taken from the low of December 15, 2016. The precious metal recorded a new 16-week high at 1321.28 yesterday.
As long as the price continues to trade above the uptrend line, the likelihood for the bulls to take charge again and drive the price higher is high. If there is a bullish run, penetrating the 1321 strong resistance level, the price could extend its gains towards the 1334 barrier, defined by the peaks of the September 13 and 15 as well as the 1357 high level.
On the flip side, a dip below the 1305 support level, could open the door for the 23.6% Fibonacci retracement level, near 1301, with the low at 1236 and the high at 1321. Moreover, a drop lower could push the price to touch the 38.2% Fibonacci level, near 1288.
Having a look at the short-term time frame and the technical indicators, the notion for further correction is also supported by the MACD oscillator. The MACD is moving lower in the positive territory and is losing its strong bullish momentum. However, the RSI indicator is sloping upwards above the 50 level, signaling for a continuation of the upward movement. The indicators seem to be in confusion and traders need to wait for the price to confirm the next move.
Gold had edged lower since Wednesday’s trading session as the recovery of the greenback caused the sell-off of the metal. The price had posted an aggressive bullish run during the previous three weeks following the rebound on the 1236 support level, which overlaps with the ascending trend line taken from the low of December 15, 2016. The precious metal recorded a new 16-week high at 1321.28 yesterday.
As long as the price continues to trade above the uptrend line, the likelihood for the bulls to take charge again and drive the price higher is high. If there is a bullish run, penetrating the 1321 strong resistance level, the price could extend its gains towards the 1334 barrier, defined by the peaks of the September 13 and 15 as well as the 1357 high level.
On the flip side, a dip below the 1305 support level, could open the door for the 23.6% Fibonacci retracement level, near 1301, with the low at 1236 and the high at 1321. Moreover, a drop lower could push the price to touch the 38.2% Fibonacci level, near 1288.
Having a look at the short-term time frame and the technical indicators, the notion for further correction is also supported by the MACD oscillator. The MACD is moving lower in the positive territory and is losing its strong bullish momentum. However, the RSI indicator is sloping upwards above the 50 level, signaling for a continuation of the upward movement. The indicators seem to be in confusion and traders need to wait for the price to confirm the next move.
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