Gold price has tested today the short-term support at $1,900 and bounced back towards $1,940. In previous posts we noted the bearish head and shoulders pattern and the importance of the $1,900 price level as the first key support.
Gold price remains above the Daily Kumo, confirming medium-term trend remain bullish, but as long as price is below both the tenkan-sen (red line indicator) and the kijun-sen (yellow line indicator), then price is vulnerable to a move towards the cloud. As we explained in previous posts, bulls need to recapture $1,950 in order to decrease chances of a deeper pull back. The tenkan-sen and kijun-sen are found around $1,950-60 area. This resistance area is key. A rejection here could bring price back to the $1,900 support. Today's candlestick so far confirms the importance of the $1,900 support. We can now say with a high degree of certainty that if price now breaks below $1,900, we could see a deep corrective pull back towards $1,850-20 area. If bulls manage to recapture $1,950-60 then we can challenge the $2,000 price level again.
