XAU/USD 4H Chart 9:45AM EDT 7/12/2012
Gold has been trading in a consolidation/congestion pattern, with higher lows and lower highs since finding support near 1530 on May 15. Note in the 4H chart, the flat 200-4H-SMA, the whipsaw action between moving averages, as well as between price and the MAs. The RSI has been tagging 70 and 30 without any development of momentum in one direction. Most of all, price action shows consolidation.
It has been bearish since last week (July 3), and is now falling to toward 1550, which would come up against the consolidation pattern support. A break below this exposes key support at 1522-1530, which is seen in the daily chart as a range larger range support going back to 2011.
We can expect some bullish intent from large range support in the daily chart. However, we should note that the peaks have been coming down, and our bullish outlook should probably be limited to the 1660-1665 area, in confluence with the 200-day moving average, a declining trendline, and the middle of the range roughly between 1800 and 1530.
A break below 1520 however should test the 1500 psychological barrier before exposing the next support pivots in the 1462-1477 area.
XAU/USD Daily Chart 9:50AM EDT 7/12/2012