- Gold staged a goodish intraday bounce from short-term descending channel support.
- The uptick lacked any follow-through, albeit the bias remains tilted in favour of bulls.
- A convincing break below the trend-channel will negate prospects for any further gains.
Gold struggled to capitalize on its early North American session uptick and met with some fresh supply near 100-hour SMA, around the $1805 region.
The intraday pullback attracted some dip-buying around the $1790 region, which marks the lower boundary of a short-term descending trend-channel. Against the backdrop of the recent strong gains, the mentioned channel constitutes the formation of a bullish continuation – flag pattern on short-term charts.
The constructive set-up is further reinforced by bullish technical indicators on the daily chart. However, mixed oscillators on hourly charts warrant some caution before placing any aggressive intraday bullish bets. Nevertheless, the commodity still seems poised to resume its well-established bullish trend.
In the meantime, any subsequent positive move is more likely to confront a stiff resistance near the upper boundary of the trend-channel, currently around the $1810 region. A convincing breakthrough will add credence to the positive outlook and set the stage for a move to retest multi-year tops set last Wednesday.
On the flip side, the $1790 level might continue to protect the immediate downside, which if broken decisively will negate any near-term bullish bias and prompt some aggressive technical selling. The commodity might then accelerate the fall towards the $1782-81 intermediate support en-route the $1770-69 region.
Gold 1-hourly chart
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Technical levels to watch
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