Gold is trading at $1,695 level and most likely will challenge the $1,700 psychological level soon again. Price plunged on Friday as the US data came in better than expected, so the metal dropped as much as $1,670 level. However, now it comes back to test and retest some broken levels.
The COVID-19 crisis slowdown and the positive sentiment could force the gold price to develop a corrective phase. It is still premature to talk about a larger drop as long as the USD stays lower versus some if its rivals. The yellow metal could decrease if the dollar will dominate the currency market, if the USDX will start another leg higher.
Gold has found strong support right on the median line (ML) of the dark blue ascending pitchfork, it has failed to close on the $1,674 - $1,670 support area, signaling a temporary increase.
The price could come back only to test and retest the $1,700, and the $1,718 levels before it resumes the downside movement. The price has finally reached the median line (ml) of the minor orange descending pitchfork signaling that we may have a further drop in the upcoming period as long as the price stays within the descending pitchfork's body.
Still, a larger and a significant decrease could be confirmed after a valid breakdown below the median line (ML) of the major ascending pitchfork, below the median line (ml) of the minor descending pitchfork, and below the $1670 static support.
RSI indicator has indicated a bearish divergence in the last weeks, but the outlook is still bullish as long as the price is trading above the median line (ML) of the ascending pitchfork. The upside movement will resume if the price increases and if it escapes from the descending pitchfork's body, after a valid breakout above the upper median line (uml) and above the PP ($1,719) level.
- GOLD Trading Recommendations
Gold will extend its downside movement if the price closes below the $1,670 level, the next downside targets are seen at the S2 ($1,619) level, at the $1,600, and at the lower median lines (lml, LML).
On the other hand, a long opportunity could be confirmed by a valid breakout above the upper median line (uml) of the minor orange descending pitchfork and if the price stays above the median line (ML) of the major ascending pitchfork.
