The price of gold is trading in the red at 1,654 at the time of writing. Technically, XAU/USD reached a major dynamic resistance and now it has turned to the downside. Still, a larger drop needs confirmation.
The yellow metal crashed as the US ADP Non-Farm Employment Change came in at 239K far above 178K expected and compared to 192K in the previous reporting period. Also, XAU/USD drops as the USD appreciates ahead of the FOMC. The Federal Funds Rate hike could be bearish for Gold.
XAU/USD Flase Breakout!
XAU/USD reached the downtrend line which represents a dynamic resistance. It has registered only a false breakout through this obstacle and above the 1,657 former high signalings exhausted buyers.
The uptrend line and the weekly pivot point of 1,652 represent downside obstacles. 1,649 stands as support as well. On the other hand, today's high of 1,658 stands as an upside obstacle.
Gold Forecast!
A new lower low, a valid breakdown below 1,649 activates more declines. This is seen as a short signal.
A new higher high, a valid breakout above 1,658 activates a larger swing higher and brings new longs.
