Gold Technicals – Sliding Lower Gingerly

After trading sideways for a fair bit following the 1,300 break, Gold prices is on the move once again. Prices broke the soft support of 1,284 during US session yesterday, with the subsequent bullish recovery unable to break the aforementioned support turned resistance and opening up the possibility of a bearish movement.

Technically speaking, this is an open invitation for bears who have not participated in the previous bearish run to re-enter, as the holding of 1,284 indicated that prices is heavily bearish and the next leg of bearish push may be soon. Unfortunately for those Asian traders, they may have missed this move once again as prices have already moved when Asian market came into full.

Hourly Chart

Prices started to push below 1,284 during pre-Japan opening hours, trading below Monday’s swing low during early Asian hours. In terms of entry signal, this sell-off is already on the move, and traders who enter right now will be considered as “chasing”, generally regarded as a taboo amongst trend traders. Nonetheless, even if they enter right now, the difference may only be marginal considering especially if the risk/reward ratio is huge, so traders who are able to manage their risk adequately may still find current price attractive to sell into.

For those that may be more conservative, there is a chance that prices may rebound higher from here to test Channel Top, providing yet another entry potential should Channel Top holds. Stochastic readings are within the Oversold region right now, with Stoch curve pointing higher and crossing the Signal line – suggesting that bearish momentum may still be weak. Furthermore, current candle is showing a bullish Hammer, a good sign for short-term reversal.

With this in mind, it is necessary to point out that there is a chance that prices may actually break Channel Top which will open up 1,288 as bullish target. Should 1,288 gets broken, we could even see bullish pressure building bringing us to 1,300 once again. At current juncture it is hard to imagine the reasons for prices to be able to climb up, but considering that market is highly speculative now with regards to Fed tapering action, do not take anything for granted.

Weekly Chart

In this vein, we should also be aware that current downtrend in Gold prices with 1,250 as target does not mean that prices will definitely reach there, as any news announcement/Fed statements that can change current short-term direction and propel prices above 1,300 is likely to change long-term sentiment as well. Furthermore Stochastic indicator suggest that bearish momentum may be reaching Oversold region soon, and a technical rebound may be possible. Therefore, even though current trend remains bearish, upside potential remains. Bears should definitely not count their eggs before they hatch.

More Links:
AUD/USD – Slide Continues Despite Excellent Australian Housing Data
USD/JPY – Little Movement As Current Account Falters
US10Y Technicals – Finding Support On 126.5

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.