Gold meets uptrend line in negative mode
· Gold eases beneath 20-day SMA
· MACD and stochastic indicate more losses
Gold is challenging the medium-term ascending trend line near 2,030 after the sell-off that started from 2,088. The crucial support level for traders to have in mind is the 38.2% Fibonacci retracement of the upward wave from 1,810 to 2,145 at 2,016, where the yellow metal may create a rebound to continue the bullish trend.
Momentum indicators are pointing to a neutral to negative bias in the short term with the MACD just below its trigger line and the stochastic oscillator deep in bearish territory. However, the stochastics have reached the oversold area and the %K line is still attempting a bearish cross with the %D line, suggesting more negative actions on price.
Further losses should see the 2,016 barrier, which moves near the 50-day simple moving average (SMA) acting as a major support. A drop beneath the uptrend line could endorse the bearish scenario and open the way towards the next key level of the 50.0% Fibonacci of 1,978 ahead of 1,974.
In the event of an upside reversal, the 23.6% Fibonacci at 2,066 could act as a barrier before being able to re-challenge the previous top of 2,088. A break above this level would shift the outlook back to strongly positive, hitting 2,100. Further gains would lead the way towards the record high of 2,145, achieved on December 4.
All in all, gold prices are still in a positive territory; however, the technical indicators are suggesting a downside correction.
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