Commodities

Technical Analysis – Gold bears break key borders; uptrend at risk below 1,450

Posted on March 19, 2020 at 9:08 am GMT

Christina Parthenidou, XM Investment Research Desk

Gold closed slightly below the 200-day simple moving average (SMA) on Wednesday for the first time since the end of 2018, having breached the supportive trendline from 1,269 earlier this week too.

Adding to the bearish sentiment, the RSI continues to extend south and is ready to pierce its 30 oversold level, while the MACD is deep in the negative territory , below its trigger line, and close to a former support area, hinting a cautiously short-term bearish bias.

From a technical perspective, whether the sell-off will get more legs may depend on the 1,450 level which strongly rejected downside corrections this week. The 50% Fibonacci of the 1,196-1,703 upleg is also located in the neighbourhood, providing extra importance to the region.

Should the price crash below that barrier, it may not stop until the 61.8% Fibonacci of 1,390, where the precious metal found some footing back in July. Slightly lower, traders should also closely watch the area around 1,360 that stubbornly kept the bulls under control during the 2016-2018 period.

Otherwise, if the bulls take over above the 38.2% Fibonacci of 1,509, the area between the 23.6% Fibonacci of 1,583 and the 1,610 number could come in defence. Surpassing that zone too, traders would resume confidence on the market’s long-term uptrend, with the spotlight turning back to the 1,700 peak.

In brief, gold’s uptrend is at risk, as the short-term bias continues to look bearish near previous lows.

gold

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