Red lines- bearish channel
blue line- bullish RSI divergence
Green line- double bottom horizontal support
Gold is trading around $1,642. Yesterday we showed in our analysis the bearish rejection by the cloud resistance. Gold price has formed a lower high and remains inside the main bearish channel it is in since February. As long as price is inside the channel, bears remain in control. Key support is found at the recent double bottom around $1,615. We have mentioned many times before the existence of a bullish RSI divergence, but this alone is not a reversal signal. It means that bears need to be cautious and that the downtrend is weakening. The bearish divergence can continue for a long time, that is why we need also price to break above key resistance levels in order to confirm a trend reversal. The RSI divergence is an early indication of a possible reversal. Sometimes it comes too early and it continues providing divergencies without reversing price trend.
