Gold has been bearish since hitting a high on the year around 1307 in February. It continued to decline towards the 1130 low on the year until stalling around 1150 this week. Then it shook a little ahead of the FOMC statement (3/18), and then rallied sharply as the market sold the USD across the board after the event risk.
Gold price rallied sharply back above last week’s highs. The 4H chart shows a loss of the bearish momentum as the 4H RSI cleared above 60 and price climbed above the 50-period SMA in the 4H chart. At first this rally was vulnerable because of the previailing, but today’s price action is suggesting further ascent at least in the short-term, in the context of a bullish correction.
Price bounced off 1160 a previous resistance area now treated as support. It is also where the 50-period SMA resided. A cross over and then a respect of the SMA as support is call the slingshot signal, and in this case, it signals further upside in the short-term.
The daily chart shows that if the current bullish correction does materialize, we should expect support as price approaches 1200. Here there is a cluster of resistance:
1) a falling trendline,
2) a previous support/resistance area
3) near the 100-day SMA.
We should also expect resistance as the daily RSI gets into the 50-60 area. If the market is indeed in bearish continuation for the medium-term, this short-term bullish correction might provide an opportunity for sellers to get in on a better price.
Top the downside, we can expect a bearish attempt back towards 1150, then towards the 1130 low on the year.
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