XAU/USD reaches a low of $1,784.21 after breaking the narrow range that has dominated the market
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The price of the precious metal surged almost 295 points after hitting rock bottom.
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The Moving Average indicator maintains its bearish price signals.
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The momentum oscillator, the Relative Strength Index, maintains its position within the natural zone and lacks impetus.
Gold reached a low level at 1.784.21 after breaking price limits that controlled the scene in the past few trading weeks. However, the yellow metal has risen back to the range after rebounding by around 295 pips from the rock bottom. At the time of writing, XAU/USD was trading at 1807.66, down 3.03 or (0.17%) on a daily basis.
The precious metal has been in a frozen mood since June 17. As a result, gold has been trading in a narrow range where the price has been consolidating inside a tight sideways channel. On Friday, the XAU/USD broke the price limits, resulting in hitting the rock bottom of 1784.21, which was last seen in January of this year before it rebounded towards the previous price range.
This analysis relies on a 4-hour timeframe
On the four-hour chart, the Moving Average indicator maintains its bearish price signal; the 100-periods slope crosses the 200-periods slope line as well as the 50-periods slope crosses below the 100-periods slope line, which indicates a bearish signal in the not far future. On the other hand, the momentum oscillator (RSI) lacks momentum. Records. 45.56 on the value line, which does not support price on following a market trend route in the current reading.
However, the more likely scenario to occur is the bearish scenario. As a result, we will begin with the hurdle that could prevent the price from breaking the range again. The first hurdle on the downside will be the support level of 1805.18. If the price could breach the aforementioned level, that would pave the way towards 1798.70. A successful close below that level would bring 1793.70 to market participants' eyes, followed by Friday’s low at 1784.40.
Alternatively, if the first hurdle on the downside at 1805.18 could prevent the price from falling below, that could push the price to retry conquering today's high at 1814.30. A successful break of today's high would open the door towards 1818.19, followed by the resistance level of 1830.72. If the price could breach the previously mentioned level, that may bring the price to hit the highest level recorded on Thursday at 1824.37.
Author
Mohammad Quqas
Independent Analyst
Mohammad Quqas has a bachelor's degree in finance and banking. He has been trading forex for years, which has given him expertise in working with foreign currencies, commodities, and indices.
