Gold Price Analysis: After the break lower there could be a retest before the move continues
- Gold is trading 0.54% lower as the dollar strength continues.
- The next support is USD 1863.24 per ounce.
Gold 4-hour chart
Gold has broken lower over the past couple of sessions as the greenback strength gathers momentum. It is hard to confirm if this is a deep correction or a reversal although the latter seems less likely. The global risk environment has not been too great either and gold usually shines during times of turmoil so there may be a lagging effect for this theme.
Looking at the technicals, the blue support level that has been broken was pretty firn. Now the consolidation low marked in red could be the next big target for the bears. If the bulls are to take charge the blue line at USD 1915 per troy ounce could be the next resistance. Beyond that, the black upward sloping trendline could also be another resistance zone to watch.
The indicators are understandably bearish. The Relative Strength Index is oversold and this could mean there is a small correction before the move continues. The MACD histogram is in the red and the signal lines are under the mid-zone. There is a good degree of MACD separation too indicating the move may continue.
The underlying uptrend on the higher timeframe may not be over. Before the bulls were waiting for the price to break the USD 2k but now the new level to watch to the upside is USD 1915 per troy once. Having said this, if the move lower is serious then there could be a retest and rejection of the levels mentioned.
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Additional levels
Author
Rajan Dhall, MSTA
FX Daily
Rajan Dhall is an experienced market analyst, who has been trading professionally since 2007 managing various funds producing exceptional returns.
