Black lines- expected path
Red lines- bearish channel
Blue lines- bullish RSI divergence
In previous posts we noted the increased probability for Gold price to form a higher low and start a second leg higher towards $1,760. Gold price today reached as high as $1,754 making a short-term higher highs and higher low. Gold price initially warned us of a coming reversal with the bullish RSI divergence. Although price is still trading inside the medium-term bearish channel, the chances for a bounce were high. Price is approaching the upper channel boundary and short-term bounce target of $1,760. Bulls do not want to see price fail to hold above $1,700-$1,710. This would be a very bearish signal. If Gold continues making higher highs and higher lows and exits above the bearish channel, we could see a bigger reversal to the upside towards $1,850.
