Commodities

Technical Analysis – Gold bounces off 1,800; broader outlook is bearish

Posted on November 25, 2020 at 2:37 pm GMT

Melina Deltas, XM Investment Research Desk

Gold prices rebounded off the 1,800 significant round number, which is a new four-month low, achieved on Wednesday. The yellow metal is currently approaching the red Tenkan-sen line around 1,818 and the momentum indicators are turning higher. The RSI is testing the 30 level, suggesting that an upward retracement is on cards, while the stochastic posted a bullish crossover in the oversold territory.

In case the pair changes its short-term direction to the upside, the bulls will probably challenge the 1,818 immediate resistance ahead of the 20-period simple moving average (SMA) at 1,838. A break higher, could last until 1,850-1,856 region, which overlaps with the 40-period SMA as well. Further up, the area around the 100-period SMA and the 1,880 barrier could be another potential obstacle for upward movements.

Alternatively, additional declines may drive the price towards the 1,800 psychological level, before the 1,789 bottom from July 17 comes into view. Beneath the latter, the 1,747 support, being the low from July 2 could be another level in focus.

Turning to the medium-term picture, the metal switched to bearish mode after the sell-off from 2,015. The SMAs continue to head south, and only a jump above the 100-period SMA and the 1,900 resistance may shift this view to neutral-to-bullish.

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