Gold price is pulling back after making a spike higher in early trading this morning at $1,689. The Daily candlestick is a bearish reversal one as the long upper tail with a hammer formation does not leave us with the confidence that a new high is coming soon.
Green line - bearish divergence
Gold price is making new highs not followed by the RSI. The RSI is making lower highs in what we call a bearish divergence. This is an important warning. Not a reversal signal, but just a warning. Gold price has recently moved higher in a parabolic way, so it is normal to see big fluctuations and big drops as volatility rises. Weekly support is found at $1,600-$1,620 and we could see a pull back towards that area before we resume the up trend to $1,700.
