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    Gold Rolling Over at Channel Top Resistance

    Gold Rolling Over at Channel Top Resistance

    After reacting lower from the vicinity of 61.8% Fibonacci level (at 1286) Gold is now at the downward channel top. It shows signs of turning lower and is currently breaking the support. When price is at resistance area buying is not the high probability option.  With price breaking lower from a resistance I am obviously oriented to the short side at these levels. The weekly Stochastics and RSI are overbought while the Stochastics line is moving below the moving average. The 4h time frame looks bearish with price being at the channel and breaking below the support level at 1280.

    Gold, weekly

    Gold, weekly

    After moving higher from the support area below 1255 the price Gold is now close to both the upper end of the long term bearish channel and the medium term upward channel. I said in my analysis on Friday, that: “Gold dropped lower from the sideways move and has now found some support, which should lead to a return move closer to the 1280 area”.  The price moved through the levels I identified in lower time frames to 1285.40 before moving slightly lower in the Globex session today. The weekly candle from last week gives now a bullish indication as the price did not come down again on Friday but closed at higher levels. The 1240 to 1255 range proved important once again. The weekly support and resistance levels are at 1240 to 1255.60 and 1312. Stochastics and RSI are overbought while the Stochastics line (blue) is moving below the moving average (red) signaling that momentum is slowing down.

     

    Gold, daily

    Gold, daily

    The current price action is taking place inside the pivot daily pivot candle which roughly represents the range the sellers overcame the buyers. One of the most important rules is never to buy at resistance or to sell at support. Therefore, this is an area to look for opportunities to sell.

    Gold, 240

    Gold, 240 min

    After reacting lower from the vicinity of 61.8% Fibonacci level (at 1286) Gold is now at the downward channel top. It shows signs of turning lower and is currently breaking the support.  Trend in this time frame is lower and we have some support at closer to 1255 level. The next important level lower is give by Fibonacci extension tool at 1198 (1.618 extension level in the daily chart). This coincides with an important support area approx. at 1200, which is also relatively close to the medium term weekly channel bottom.

    Conclusion:

    The weekly Stochastics and RSI are overbought while the Stochastics line is moving below the moving average and the same applies to 240 min chart: Stochastics is giving a bearish signal. The 4h time frame looks bearish with price being at the channel top and price rolling over. With price breaking lower from a resistance I am obviously oriented to the short side at these levels.

     

    Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

    Janne Muta
    Chief Market Analyst
    HotForex


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