Gold rebounds from an upside support line
|XAU/USD tumbled yesterday, falling back below 1900. However, the fall was stopped by the short-term upside support line drawn from the low of June 15th, and subsequently, the metal rebounded. The fact that the rebound came from that upside line keeps the door open for further advances. However, in order to get confident on that front, we would like to see a decisive break above the 1960 area, which is slightly above the 100-EMA on the 4-hour chart, and is marked by the inside swing low of August 3rd.
If we indeed see a strong break above 1960, the bulls may initially aim for the high of August 3rd, at around 1985, the break of which may extend the recovery towards the inside swing low of last Friday, at around 2015. Another break, above 2015 may pave the way towards Monday’s peak, at around 2050.
Shifting attention to our short-term oscillators, we see that the RSI rebounded and exited its below-30 zone, and points to the upside, while the MACD, even though below both its zero and trigger lines, shows signs that it could bottom as well. Both indicators suggest that the downside momentum is dissipating, thereby supporting the notion for some more recovery in the near term.
On the downside, we would like to see a strong dip below 1863 before we start examining the case for more and deeper declines. The metal will already be below the aforementioned upside line and may encourage the bears to shoot for the 1815 zone, which provided strong resistance between July 8th and 16th. A move below that hurdle could extend the slide towards the 1791 barrier, which provided decent support during the same period. That said, if that area is also broken this time around, the next potential stop may be the 1759 hurdle, which is defined as a support by the lows of July 1st and 2nd.
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