Gold sits above 100-day EMA for the first time since May 10
|- Gold climbed 100-day exponential moving average (EMA) yesterday, its first break above the long-term EMA in five months.
- The bearish divergence of the relative strength index seen on the 4-hour chart indicates that 100-day EMA could be put to test again.
Gold closed above the 100-day EMA yesterday, adding credence to bullish break of the six-month-long falling trendline witnessed last week.
At press time, the yellow metal is trading at $1,230, having clocked a three-month high of $$1,236.90 yesterday.
Prices found acceptance above the 100-day EMA in the last 12 hours, courtesy of a 40 pip drop in the dollar index below 95.00.
A convincing move above the 100-day EMA adds credence to last week's upside break of the trendline connecting the Apr. 11 high and June 14 high. So, it seems safe to say that for gold, the path of least resistance is on the higher side.
However, the relative strength index (RSI) on the 4-hour chart has carved out a bearish divergence. As a result, a pullback to 100-day EMA support of $1,226 (former resistance) could be in the offing, before further upside unfolds.
Gold Technical Levels
Resistance: $1,237 (July 3 low), $1,260 (Oct. 6, 2017 low), $1,262 (July 9 high)
Support: $1,226 (100-day EMA), $1,217 (Aug. 28 high), $1,215.80 (Sept. 21 high)
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