Gold Price Analysis: 4-hour bull flag pattern is holding as the price moves lower toward $1700

Gold 4-hour chart

Gold has pulled back on Tuesday as the risk theme turns positive and equities rise. The US dollar has weakened significantly over the session but this has not helped the yellow metal recover from trading near session lows of USD 1708.80 per troy ounce. 

Looking at the chart patterns in black you can see the bull flag pattern is still intact. As the price is at the lower end of the pattern any breach would invalidate the structure and surely mean the prices could be heading lower. The blue internal trendline has already been taken out but the losses seem to have been stemmed by the 200 simple moving average (SMA). 

Looking closer at the technical indicators, the MACD signal lines have crossed over to the downside below the zero mid-line. This is considered bearish in the medium term and could indicate a bigger correction is in the making. This theory is also backed up by the Relative Strength Index indicator as it is heavily in a bearish position, although there is some more room to move to the downside. 

In terms of support zones. the 38.2% Fibonacci support at USD 1645.00 per troy ounce look firm as it has another support level close by. Bear in mind that if the price does move that low the bull flag would be obsolete and the 200 SMA would be broken. 

Additional levels