Gold is trading at 1672 level after the reversal from the 1703 level. Nevertheless, the outlook is still bullish and it could win back its early gains soon. Gold kicked off the trading week with a big gap and later closed it. Technically, this could be a signal that it may decrease in the short term.
The price has reached a new high at 1703.23 level as the global risks are intensifying. I believe that this is a temporary drop before the price breaks out above the 1700 psychological level and hits new highs.
Gold decreased in the last hours, but this could be only a retest of the broken upper median line (UML). The price jumped above the 1689.25 level - its former high signaling that the bullish momentum is very strong. Technically, gold should resume the upside movement after the failure to reach the 1555 static support and to approach the median line (ML) of the descending pitchfork.
The price jumped above the upper median line (UML) to retest the inside sliding line (SL). It rose to 1703.23 where it found a strong resistance. Now it is retesting the UML.
Gold maintains a bullish perspective as long as it is trading above the upper median line (UML) and most important above the 1600 - 1555 area. Another reversal from the UML could signal another bullish momentum.
- TRADING RECOMMENDATION
Gold is expected to resume the upside movement if it stays above the upper median line (UML), orange line right below the 1700 psychological level.
MACD and RSI are still signaling a bearish divergence, but it is not enough for us to consider selling gold. A valid breakout above the 1700 level will validate a further increase. Gold may drop in the short term only if the price closes below the 1643 previous low.
A corrective phase and a potential reversal could be confirmed below 1555 level, but we cannot talk about this scenario as long as Gold is trading much above this critical support. Personally, I would like to see a consolidation in the short term before the price overcomes the resistance level at 1.700.
