Gold Price Forecast: Rebound from key trendline support likely
|Gold (XAU/USD) is trading on the back foot, tracking the rise in the US dollar and Treasury yields, but technical charts indicate the yellow metal will likely leave another higher low along the key ascending trendline (drawn from the Dec. 12 low and Feb. 8 low).
As of writing, the metal is trading at $1,323/Oz - down 2.8 percent from the Feb. 16 high of $1,361.76.
Daily chart
The chart shows-
- The metal is flirting with the ascending trendline support.
- The relative strength index (RSI), 5-day moving average (MA) and 10-day MA is biased bearish.
So, the bears could pierce the trendline support. However, it is easier said than done, given the 50-day MA is curled up in favor of the bulls. As of now, the 50-day MA is seen at $1,329. Further, the 4-hour chart shows a bullish price-RSI divergence.
4-hour chart
The metal continues to post lower lows, but the RSI has diverged in favor of the bulls. Also, the metal is trading at the upward sloping weekly 10-MA support of $1,323.
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Bullish scenario - A close above the 50-day MA of $1,329 would add credence to the bullish price-RSI divergence (on the 4-hour chart), upward sloping 10-week MA and could yield a rally to $1,344.75 (Jan. 15 high).
Bearish scenario - A rejection at the downward sloping 5-day MA and 10-day MA followed by a daily close below the ascending trendline would allow for a bigger sell-off towards $1,290 (200-day MA).
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