Gold is declining after its last week's bullish rally. It is trading at $1.726 level. Gold may drop deeper in the short term. The price is still in the buyer's territory, so the outlook is bullish. The yellow metal is likely to decrease even if the USD loses steam in the short term.
Yesterday's candle has signaled that the bulls are exhausted. This situation could bring more sellers into the game. The global economy restart could bring optimism and risk-on sentiment as the COVID-19 crisis is slowing down. More and more investors could exit their long position on Gold and place their money into riskier assets/instruments.
The yellow metal rallied after the upside breakout from the minor triangle. It climbed as much as $1.765 level, failing to reach the R1 ($1767) level. Yesterday's candle could be considered a Dark Cloud Cover. Today's bearish candle might signal a correction in the short term.
The outlook is bullish as long as the price is above the inside sliding line (SL). Unfortunately, the failure to approach and reach the upper median line (UML) could be a strong overbought signal. RSI is showing a bearish divergence/ Personally, I believe that only a drop below the $1.671 - $1.666 area will confirm that the upside movement is finished and gold may tumble further.
It is premature to talk about a corrective phase as long as Gold is trading above the $1.700 psychological level and above the sliding line (SL - ascending dotted line). The current drop could be a temporary one and the price could come back to a higher lelvel, trying to reach at least the $1.765 yesterday's high.
- GOLD TRADING RECOMMENDATIONS
Buying - we may have another long opportunity if the price only retests the near-term support levels. A false breakdown with a great separation or a bullish engulfing could bring a great buying setup. Also, another high and a valid breakout above the $1.765 and above the R1 ($1767) will signal a further increase towards the upper median line (UML) and towards the $1.800 level. A major increase will be validated if the bearish divergence is invalidated by a further increase and by a valid breakout above the upper median line (UML).
Selling - I still believe that only a valid breakdown below the median line (ML) and below the PP ($1.666) level will offer a perfect selling opportunity, the targets are seen at the $1.600, $1.555, at the lower median line (LML), and lower at the $1.484 static support.
