Richard Perry
Independent Analyst
Yesterday’s sell-off and breach of key support at $1162.35 was an important move, but the intraday rebound which saw the gold price closing well of the day lows, leaves us with some uncertainty. For some time I have seen gold as a rangeplay with a bearish drift that has meant the need to constantly reassess the support levels. The momentum indicators are corrective without looking strongly bearish (RSI has not been below 35 since mid-March). So this leaves me reticent over running short positions for too long as the gold price is still prone to near term sharp rallies. The intraday hourly chart hints at perhaps the latest move as a bullish key one hour reversal (or bullish engulfing candle) has induced a move that means the downtrend built up over the past four days is now being broken. The momentum indicators are unwinding and now a near term test of the resistance of the old support at $1168 is underway. A move into the low $1170s could signal another potential near term rebound, with a move above $1175 resistance certainly suggesting a rally is on. The sellers have got some work to do to continue this bear run in its current form. A move back below $1161 intraday support would re-open yesterday’s low at $1156.90 and also the key March low at $1142.90.
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