Gold is trading in a messy, choppy manner. The 4H chart shows a market that has been consolidating since March, and got into something of a slightly falling channel in April. In May, we saw a bullish breakout and so far, it looks like gold will open up a bullish outlook. However, this week, we are seeing a retreat from 1232, and price is now approaching a key support area around 1200.
We can see that around 1200, gold is testing the broken channel resistance, the 100- and 50-period SMAs and a previous resistance pivot from May 4th. The RSI is cracking 40, and if gold were to maintain the bullish momentum, it should rebound soon or it would be a sign of a loss of bullish momentum.
If price does not bounce off 1200, there might be some elbow space towards 1195, but below that, we should be looking at the bearish scenario back towards at least the 1170 area. Let’s zoom out to the daily chart.
Looking at the daily chart, we see a bearish market that was neutralized at the beginning of 2015. However, we saw a dip in February and March, which revived the bearish bias and momentum. Currently, that bearish bias is lost again as price failed to hold under the cluster of 200-, 100-, and 50-day SMAs. But the RSI is still under 60, which shows maintenance of the bearish momentum. From the daily chart’s perspective, I would say that gold is threatening to break 1200 and continue its bearish trend, even if it is choppy.
Now, if I am wrong and price holds above 1200, I would still limit the bullish outlook to the 1240 and then 1255 resistance pivots from Q4 2014. To the downside, below 1170, we might be looking at a support pivot around 1144 and the then 1130 2014-low.
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