Gold Stays Within a Downside Channel

JFD Team JFD

XAU/USD traded higher yesterday after it hit support slightly above the 1445 zone, which is near the low of November 12^th. That said, the precious metal continues to trade within the downside channel that’s been containing the price action since mid-August. Thus, even if the metal rebounds somewhat more, we believe that the medium-term trend remains to the downside.

As we already noted, the price could trade slightly higher within the channel, perhaps to challenge again the 1480 zone, which is marked by the high of November 20^th, and provided support between October 11^th and 30^th. The bears may take charge from there and push for another test near the 1445 zone. If they are strong enough to overcome that obstacle this time around, the decline could be extended towards the lower bound of the aforementioned channel, or the 1410 zone.

Shifting attention to our short-term oscillators, we see that the RSI rebounded from fractionally above 30, while the MACD lies within its negative territory, slightly below its trigger line, but shows signs that it could start bottoming as well. These indicators detect slowing downside speed and support the notion for some further recovery before the next leg lower.

We would like to see a decisive move above 1515 before we turn our eyes to the upside. That zone provided strong resistance between October 3^rd and November 1^st. The metal would already be above the upper bound of the downside channel and the bulls could be tempted to drive the battle towards the high of September 24^th and 25^th, near the 1535 zone. If they are not willing to stop there, then a break higher may open the way towards the 1557 area, marked by the peak of September 4^th.

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