Gold Technical Analysis – Downtrend Remains Intact
Gold price after trading above the $1350 level versus the US dollar found sellers and started to move down. The downside move was very strong and was due to the FED chairwoman comments related to the future interest rates hike.
During the downside move, Gold broke a couple of important support levels. First, there was a contracting triangle pattern on the 4-hours chart of GOLD, which was broken to pave the way for more losses.
Second, there was a close below the 100 simple moving average on the same chart, which is a strong bearish sign. The price also broke the $1320 support, and traded close to the $1300 level.
The price after testing $1302 started a correction, but found sellers near the 23.6% Fib retracement level of the last wave from the $1356 high to $1302 low. However, there is a bearish trend line on the 4-hours chart of GOLD, which also acted as a barrier and prevented the upside move.
As long as the price is below the trend line resistance, there is a chance of a test of $1300. A break above it could ignite further correction in Gold. In that case, the price may test the 50% Fib retracement level of the last wave from the $1356 high to $1302 low.
However, the 100 simple moving average on the upside is waiting to act as a barrier for buyers. Overall, it looks like Gold in a downtrend and selling rallies can be preferred.
Sell Idea – Sell rallies as long as the price is below the $1320 level keeping a test of $1300 in sight.
Today, the US will witness a crucial economic release. The US Unemployment Rate and NFP number will be reported. The outcome may have a huge impact on Gold price and one must trade carefully around the stated event.