Red lines- bearish channel
Green lines- bullish RSI divergence
In our previous analysis we warned bears that there are increased chances of a bounce in Gold price towards $1,660-70. Price was trading very close to the lower channel boundary and the RSI was providing bullish divergence signals. Gold price yesterday spiked higher towards $1,662. Price has not reached the upper channel boundary yet and therefore there is still some upside potential. A move higher towards $1,675 is justified but not necessary. Will Gold price remain inside the downward sloping channel? As long as this is the case we remain bearish. Channel and horizontal resistance is found at $1,670-75 area. This could be seen as another selling opportunity as price is trading close to key short-term resistance levels. A break above $1,670-75 will most probably open the way for a bigger bounce towards $1,700-$1,730.