RSI-14 with Simple Moving Average 5-period of RSI attached.
Market and Price Action (patterns, candlesticks)
Short-Term to Medium-Term
- Gold has been consolidating, but the weakness has been contained within a rising channel , and supported by the 200SMA in the 4H chart.
- The momentum is still bearish in the short-term, but if the RSI reading in the 4H chart rises above 60, it is ranging instead of bearish.
- A return to 1575 is possible with a break above the 61.8% retracement level near 1530 .
- The daily chart below shows an upside swing projection to 1650 (suggested by a positive reversal signal where the RSI low was lower, but the corresponding price low was higher). This mediumt term bullish continuation scenario opens up with a break above 1575 .
- Note that the RSI reading in the daily chart is still above 40, maintaining a longer term bullish momentum.
- Also note that gold is in a long-term bullish mode, and even if the market extends the current correction in a swing projection manner, we are still within a long-term rising channel and the 200SMA in the daily chart.
- The point is that the bearish outlook is very tentative, and a major reversal should not be considered until at least a break below 1400 . On the otherhand, the bullish continuation scenario appears to be setting up.
Fan Yang CMT
Chief Technical Strategist
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.