Gold technical analysis: Eyes break below $1,400 after bearish engulfing

Gold’s daily chart shows a bearish engulfing candle.
The 14-day RSI has turned bearish for the first time since the last week of May.

Omkar Godbole FXStreet Contributor

Gold is looking south and could drop below $1,400 before the weekend, according to technical charts.

The yellow metal fell from $1,434 to $1,410 on Wednesday, engulfing the price action seen in the preceding seven days.

The bearish engulfing candle indicates a resumption of the pullback from the July 19 high of $1,453.

Further, the metal also confirmed a downside break of an ascending channel with a close below $1,420 yesterday.

What’s more, the 14-day relative strength index is now reporting bearish conditions with a below-50 reading for the first time since the end of May.

All-in-all, the path of least resistance is to the downside. Acceptance below the psychological support of $1,400 would shift risk in favor of a drop to the ascending 50-day moving average (MA), currently located at $1,378.

As of writing, gold is changing hands at $1,407, representing 0.30% drop on the day.

Daily chart

Trend: Bearish

Pivot levels

1. R3 1449.2
2. R2 1441.04
3. R1 1427.02
PP 1418.86
1. S1 1404.84
2. S2 1396.68
3. S3 1382.66

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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