We've been warning Gold bulls for the last few sessions when price was trading above $1,900 that a pull back was imminent. The RSI bearish divergence warning was our first sign of weakness and we mentioned that above $1,900 upside potential was limited. Our pull back target was at the lower channel boundary at $1,870 and earlier today this target was finally achieved.
Black lines - bearish divergence
Gold price remains inside the bullish channel. Price has stopped its decline at the lower channel support of $1,870. Price is now bouncing towards $1,880 after the announcement of the Non-Farm Payrolls by the US Government. The RSI has reached oversold levels and is turning higher. I expect price to continue higher from $1,870. A bounce towards $1,890-$1,900 is justified after the strong decline from $1,916. Support is crucial at $1,870-68 and if broken we should then expect Gold price to continue lower towards $1,850-$1,820.
