Gold returns above 1,700; still bearish in the short term.

Gold is extending its positive momentum following the bounce off the 1,671 support level, having surpassed the 20-period simple moving average (SMA) in the 4-hour chart. However, the structure in the short-term remains bearish despite the latest upside correction.

In momentum indicators, the RSI is pointing up near its neutral threshold of 50, while the MACD oscillator has posted a bullish cross with its trigger line in the negative territory.

Should gold challenge more levels to the upside, immediate resistance could come from the 40-period SMA at 1,713. Clearing this line, the 1,716 and 1,718 barriers, including the 38.2% Fibonacci retracement level of the down leg from 1,765 to 1,671 could attract investors’ attention ahead of the 100-period SMA, currently at 1,724. More upside pressures could hit the 61.8% Fibonacci at 1,729, which coincides with the upper surface of the Ichimoku cloud.

On the flip side, a drop below the 20-period SMA could move the market towards the 23.6% Fibonacci at 1,693, which overlaps with the red Tenkan-sen line. A close below this level could pressure the price until the 1,671 low, registered on June 5 and the 1,661 support from April 21.

In brief, the yellow metal is in the process of an upside correction in the very short-term, but the outlook continues to hold bearish since May 18.


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This information is not considered as investment advice or investment recommendation but instead a marketing communication. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Source: XM

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