A Month-Long Decline: Gold has been retreating for about a month now since making a high on the year at 1307 as we can see in the 4H chart below. Since that high, price action has been making consistently lower highs and lower lows. Price has fallen below the 200-, 100-, and 50-period SMAs in the 4H chart. The SMAs are falling into bearish alignment, and the 4H RSI reflects a market with persistent bearish momentum.
Falling Channel Lines: From the 4H chart, we can also visualize and project some channel support and resistance lines to describe the month-long decline in gold price. While there is no sign of slowing or stopping this decline, gold does have a very key support here at the psychological level of 1200.
Rising Trendline Support: When we look at the daily chart, we can see that price action has been bullish since November 2014, after marking a low on the year near 1130. It has held above a rising trendline since then, and that trendline is being tested today as price tagged the 1200 handle.
Outlooks: Now, if the current decline extends below 1200, the bullish structure of gold will be broken, and price action will expose the 1130 low. However, a break above 1250 should show that bulls are defending the 1200 level well. Looking back at the 4H chart, a break above 1250 would likely push price above the SMAs and a falling speedline. This would revive the current uptrend and put pressure towards the 1300-1307 highs.
Another previous metal, silver, is in a similar situation, except its rising trendline was cracked.
Still, if price can bounce back above 17.50, silver would maintain a bullish outlook back towards the 18.50 high with risk of pushing higher. Note that the RSI has tagged 70, and is still above 40. We can therefore say that the prevailing bullish momentum is still in play. Failure to push above 17.50 however puts the pressure towards the 15.50 support down to the 14.65, 2014-low.
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