Commodities

Technical Analysis – Gold’s bearish drive accelerates; downward risks grow

Posted on September 23, 2020 at 7:40 am GMT

Anthony Charalambous, XM Investment Research Desk

Gold is gaining negative momentum beneath the simple moving averages (SMAs) and the Ichimoku cloud, as reflected in the declining Ichimoku lines. The commodities’ recent break out of the sideways market is also receiving backing from the evolving bearish tone in the SMAs.

The short-term oscillators further convey the descent in the precious metal. The MACD, in the negative region, is weakening below its red trigger line, while the RSI has dipped into oversold territory. Additionally, the descending stochastic lines and the slip of the %K line below the 20 level promote further losses in the commodity.

To the downside, immediate tough support may arise from the 1,873 level, that being the 50.0% Fibonacci retracement of the up leg from 1,670 to the all-time-high of 2,074, and the vital 1,863 trough underneath. Should this critical border fail to dismiss a free-fall, the price may then meet the 1,845 barrier from September of 2011. Extending the dive may then target the 61.8% Fibo of 1,825 and the 1,815 obstacle.

If buyers re-emerge, early constraints may stem from the red Tenkan-sen line at 1,900 and the neighbouring high of 1,907. Overcoming this, the price may jump towards the 38.2% Fibo of 1,920 ahead of the inside swing low of 1,933. Next, the fortified resistance section from the cloud’s lower band of 1,939 until the 1,960 high may attempt to impede further appreciation in the metal. However, should the bulls surpass this limiting zone (encapsulating the SMAs), their focus could then shift towards the 1,972 peak and the adjacent 23.6% Fibo of 1,979.

Summarizing, the very short-term picture conveys an increasingly bearish bias. A break below the 1,863 key trough could plummet the commodity and trigger further negative worries.

gold

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