Gold Price Analysis: Some daily & weekly chart technical signals point to a retracement

There is a divergence on the weekly chart that could point to a move lower.
The price is still in an uptrend but there are some suggestions it is overextended.

Rajan Dhall, MSTA FX Daily

Weekly chart

The weekly chart is showing a massive three-wave divergence on the Relative Strength Index indicator (RSI). This is sometimes a sign that the price might be starting to pull back from its mammoth uptrend in recent times.

The USD 1800.00 level did look like the target in this bull run but there could always be a small retracement on the way to the major level. in the other weekly chart below this one, I have colour coded the support levels from the last consolidation at the highs. USD 1676.78 is the next major support on the downside. This purple line is the mean value area from the last consolidation and it had been used on a few good occasions to provide both support and resistance.

Looking closer at the zone, the orange level at USD 1534.00 is the main consolidation low. It would be quite a deep retracement if the price came that low but stranger things have happened. If there is a firm break below there then the market could be looking at a change in the underlying trend. For now the trend is still up and this is just a small blip.

Daily Chart

Not only does the daily chart confirm the divergence the 38.2% and the 23.6% support zones confluence perfectly with Fibonacci zones. Keep a close eye on these levels as they look strong and match with the weekly support and resistance zones.

The RSI is also showing a gradual trend lower and upside breaks of trendlines can also be an important signal that the trend could be continuing. Overall this is clearly still a bull market. The point now would be working out if it does retrace, how much? and where is the next entry point?.

Author

Rajan Dhall, MSTA

FX Daily

Rajan Dhall is an experienced market analyst, who has been trading professionally since 2007 managing various funds producing exceptional returns.

EUR/USD clings to daily gains, still below 1.1900

EUR/USD manages to reverse two daily pullbacks in a row and advances modestly on Thursday, hovering around the 1.1880 zone amid the inconclusive price action around the US Dollar. Meanwhile, weekly Initial Claims rose more than expected last week, while attention is expected to shift to the upcoming US CPI data on Friday.

GBP/USD picks up pace, hits 1.3640

GBP/USD trades with modest gains around 1.3640 so far on Thursday. Indeed, Cable looks to leave behind the weakness seen in the first half of the week in a context of an equally erratic performance in the Greenback and disappoting UK data releases.

Gold stays offered below $5,100

Gold keeps the choppy trade well in place on Thursday, navigating the area below the $5,100 mark per troy ounce amid the lack of clear direction in the Greenback, declining US Treasury yields across the curve and caution ahead of Friday’s publication of US CPI.