Commodities

Technical Analysis – Gold set for a close above 200-SMA and within cautious territory

Posted on December 16, 2020 at 10:24 am GMT

Christina Parthenidou, XM Investment Research Desk

Gold is set to close above the 200-period simple moving average (SMA) in the four-hour chart, but there is some suspicion that the precious metal could soon quit efforts given the previous downside reversals around that line.

The 1,865 former support zone is also under the spotlight and could develop into a resistance area in the short run, though the momentum indicators are currently challenging that scenario. The RSI is sloping upwards but has yet to reach its 70 overbought mark, the stochastics hold above their 80 overbought level despite moving downwards, while the MACD histogram is gradually strengthening above its signal and zero lines.

Should the bulls claim the 1,865 region, the door would open for the 1,875 – 1,882 restrictive zone where the price peaked in December and stalled several times in previous months as well. If the bullish rally accelerates beyond that wall, the next obstacle may emerge around the 1,897 hundle.

On the downside, the 1,850 mark has been strictly rejecting upside and downside movements since August and therefore will be closely watched if sellers retake control. Failure to hold above that, may expose the market to the 1,825 – 1,818 support area.

In brief, gold continues to hold a bullish bias, though downside corrections should not be a big surprise as the market is trading within a cautious territory.

gold

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