Gold technical analysis: Eyes 50-day MA support after bearish outside day

Gold created a bearish outside day on Thursday.
The candlestick pattern indicates scope for deeper correction.
The immediate support is located at $1,406 (50-day MA).

Omkar Godbole FXStreet Contributor

Gold risks falling to the 50-day moving average (MA) support, currently at $1,406, having created a bearish outside day candle on Thursday.

A bearish outside day occurs when the day begins on an optimistic note but ends with pessimism, engulfing the price action see in the previous day.

It is considered a bearish reversal and a bearish continuation pattern depending on its position.

In Gold’s case, the candlestick has appeared following a pullback from the six-year high of $1,452 and indicates continuation of the correction.

Further, the 14-day relative strength index (RSI) is reporting a bearish divergence and the moving average convergence divergence is printing negative numbers, a sign the bearish momentum is gaining strength.

The yellow metal, therefore, risks falling to the 50-day MA support st $1,406. At press time, Gold is trading at $1,416 per Oz.

Daily chart

Trend: Bullish

Pivot points

1. R3 1450.59
2. R2 1442.1
3. R1 1428.25
PP 1419.75
1. S1 1405.9
2. S2 1397.41
3. S3 1383.56

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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