Gold backs off from 10-week high, 100-day EMA is the level to beat for the bulls
- Gold is flashing red in Asia, possibly due to an uptick in the US equity index futures.
- The oversold safe haven found love this week as the sell-off in the US equities triggered a flight to safety.
- Technically speaking, the metal's bull breakout would gain more credence above the 100-day exponential moving average (EMA).
Gold is losing altitude in Asia, having clocked a ten-week high of $1,226 yesterday.
At press time, the safe haven yellow metal is trading at $1,218/z, representing a 0.20 percent drop on the day. The pullback from $1,226 to $1,218 could be associated with the overbought conditions reported by the hourly chart and 4-hour chart relative strength index (RSI).
Further, the 0.6 percent rise in the S&P 500 futures in Asia may have calmed market nerves and put brakes on the rally in the yellow metal.
Focus on the 100-day EMA
The metal jumped above the Aug. 28 high of $1,214, courtesy of risk aversion in the Us stock markets, confirming a bullish breakout, however, the subsequent failure to take out the 100-day EMA has established the key EMA as a level to beat for the bulls.
The moving average resistance would be scaled if the equity markets continue to lose ground in the days ahead.
Gold Technical Levels
Resistance: $1,226 (100-day EMA), $1,238 (38.2% Fib R of April/Aug drop), $1,251 (200-day EMA)
Support: $1,214 (Aug. 28 high), $1,200 (psychological support), $1,191 (previous day's low)
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
