Technical Analysis – Gold abandons bullish channel, but confirmation required

Gold could not sustain its bullish power above the 1,795 ceiling despite its flash spike to 1,807 on Wednesday, with the price retreating below the upward-sloping channel instead to reach a low of 1,783 early on Thursday.

While the negative breakout has raised the odds for more downside, the precious metal might have another opportunity to find its feet near the surface of the March bearish channel at 1,785, while the 50-period simple moving average (SMA) on the four-hour chart, currently aligned with the 50% Fibonacci retracement of the previous downtrend at 1,779, could also come quickly to the rescue.

According to the technical oscillators, the bias is looking neutral-to-bearish as the RSI has diminished to test its 50 neutral mark, while the MACD has decelerated below its red signal line. Yet, if the price pauses its latest pullback immediately and jumps decisively above the nearby 1,790 – 1,795 resistance, the key 1,807 – 1,815 barrier could come again under examination. A successful move higher from here could then clear the way towards the 1,825 – 1,836 zone, where the surface of the bullish channel is positioned.

Otherwise, a leg below $1,779 could trigger a sharp decline towards the 1,763 - 1,756 support region, which encapsulates the 200-period SMA, the 38.2% Fibonacci, as well as the constraining line drawn from the 2020 record high of $2,079. Failure to pivot here could cause another aggressive downfall to 1,733 - 1,727.

In summary, negative vibes surrounded gold after the close below the bullish channel, though sellers may wait for a confirmation below 1,785 - 1,779 to drive the market lower.

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