HomeContributorsTechnical AnalysisGold Challenges Crucial Downward Sloping Trendline

Gold Challenges Crucial Downward Sloping Trendline

  • Gold in a congested technical territory, capped by 50-day SMA
  • A decisive close above the trendline could shift the short-term picture to bullish
  • Momentum indicators endorse latest advance

Gold has been edging higher in the past few sessions, rebounding strongly from its drop below the 200-day simple moving average (SMA). Furthermore, the short-term oscillators suggest that bullish forces are strengthening as the price is testing the important trendline that connects its recent lower highs.

Should the buying interest persist, the bulls could attempt to conquer the May low of 1,932, which overlaps with the 50-day SMA. Surpassing that zone, the price may ascend towards the February peak of 1,959. Further advances could then cease at the July high of 1,987.

Alternatively, should bullion reverse back lower, the recent support of 1,901 could act as the first line of defense. A break beneath that zone might set the stage for the June low of 1,893. Even lower, the five-month bottom of 1,884 may provide downside protection.

In brief, gold marched towards the congested region that includes the descending trendline and its 50-day SMA. Looking forward, a clear jump above both obstacles is needed to turn the technical outlook back to bullish. 

XM is a fully regulated next-generation financial services provider of online trading on currency exchange, commodities, equity indices, precious metals and energies, with services to clients from over 196 countries worldwide. Founded in 2009 by market experts with extensive knowledge of the global forex and capital markets and with the aim to ensure fair and reliable trading conditions for every client, XM has reached international recognition by virtue of its unbeatable execution of orders, spreads as low as zero pips on over 50 currency pairs, gold and silver, flexible leverage up to 888:1, and personalized customer engagement to foster clients’ success.

Featured Analysis

Learn Forex Trading