Gold: Momentum indicators are confirming the deterioration [Video]

Gold

Gold consolidation turned into sharp correction yesterday as everything linked to the dollar took a hit. Keeping in mind the Average True Range of gold is currently $28, a level that has not even been reached in the past two weeks, this was a sudden but sharp decline on gold. Technically it is also a key shift in sentiment. The consolidation between $1902/$2015 has been broken by an intraday drop to $1882. This may not has been sustained into the close, but there is a decisive deterioration in momentum now and downside pressure is growing. We have talked previously about the continual closing levels above the 23.6% Fib (of $1451/$2072) at $1926. This was decisively broken yesterday. Initial selling pressure today is adding to the growing negative move. A close below $1902 would be confirmation of a new corrective phase. Initially this would open $1863 as the next test, but given the lack of real support until $1817, along with the 38.2% Fib at $1835, a much deeper correction could be seen. Momentum indicators are confirming the deterioration, with RSI falling at its lowest since March, Stochastics falling with downside potential and a “bear kiss” on MACD. The near term technical outlook is turning negative for a move back into the mid-$1800s, how the medium to longer term bulls then respond will be key.