Fan Yang
1
All posts from Fan Yang
Fan Yang in Fan Yang,

Gold Trading at the Crossroad

XAU/USD (Gold) showed some signs of topping last week. The 4H chart shows a double top formed at a falling resistance that's more clearly seen in the daily chart.

The market appears resilient against the double top attempt and is trading gold higher in the European-US session so far on Monday.


(Gold: 4H Chart)

The 4H RSI holding above 40 is a sign that the bullish momentum remains. 

Support:
If the 4H RSI dips below 30, and price can fall below 1320, we can shift our assessment to bearish. Otherwise, gold is at least neutral-bullish if not simply bullish.

Resistance:
The bullish outlook however is challenged by a falling resistance seen in the Daily chart. Even with a break, there is resistance seen in the 1355-1363 area.

Just above the 1365 level, there is another falling trendline that goes back to Oct. 2012. It will take a break of this resistance to truly show a breakout from the bearish mode gold's been in for almost 3 years now. In that bullish scenario, the first target should be the resistance around 1430-1435.


(Gold: Daily Chart)

Also note the extended bearish divergence with the RSI.

The bullish mode versus a resistance area sets up a potential for some sideways, whip-lash action this week.