Technical Analysis – Gold range-bound within bearish channel

Gold got trapped within the $1,798 – $1,832 region following the upturn from the three-month low of $1,786. Specifically, the precious metal is encapsulated between the resistance line stretched from the record high of $2,079 and the support line from the low of $1,450.

In the one-month picture, the market is navigated by a bearish channel, with the 20-period simple moving average (SMA) on the four-hour chart currently cancelling any bullish moves towards the channel’s top boundary at $1,816.

The momentum indicators cannot rule out some recovery in the short term as the MACD remains resilient above its red signal line. The RSI, although below 50, is pointing to the upside, while the Stochastics seem to be looking for a rebound below 20 as well. Nevertheless, neither of those indicators has shown a convincing upside reversal; therefore, investors may remain patient until they see a decisive close above the $1,836 – $1,840 restrictive zone. If that turns out to be the case, the price could accelerate towards $1,867 – that being the 38.2% Fibonacci retracement of the latest downleg. Running higher, the bulls may approach the 50% Fibonacci of $1,892 and the 200-period SMA.

On the downside, investors will keep a close eye on the $1,808 – $1,798 floor. Should that base crack, the price could tumble towards the channel’s bottom line seen around $1,760 – $1,750.

In summary, gold is expected to maintain its current neutral trajectory unless the bulls manage to pierce above the bullish channel at $1,840, or the bears take control below $1,797. 

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