The MACD shows weakness in gold. Will the bulls prevail?
Last week the gold price rose to the upper resistance level at 1341. From there, the price has gone back and found support at 1322 where it currently sits. With that, the market has approached its rising trend line again. The distance between the respective touches with the trend line is getting shorter. The trend line, together with the 1322 to 1341 area, can be decisive for further movement of the gold price.
The 38-day and 50-day smoothing lines are still parallel with a healthy distance between the two lines. So, there is no sign yet of a possible correction. This picture could change if the short line (38-day) crosses the long line (50-day) from top to bottom.
The MACD indicator shows a fragile momentum and the indicator has crossed its trigger line from top to bottom. These may be the first signs of short-term selling pressure.
Last Wednesday the market showed an inverted hammer candlestick formation. This could be another sign that prices could fall further.
The question for the next few days is whether the price can stay above its trend line or fall below it.
If the bears take over the market, the first support could be in the 1303 range. Currently, this would roughly coincide with the 38-day smooth line. If the price fall continued, further support at 1282 and 1256 may be possible.
On the way up, the market must sustainably break through the old highs at 1352 to possibly enter the resistance zone at 1366.
Gold Daily Chart | Source: ActivTrader
Written by Daniel Schuetz, External Analyst
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