Gold Daily chart 1/27/2013 9:35PM EST
Falling Channel: When looking at the daily chart, you can see that gold (XAU/USD) price has been sliding in a falling channel since Oct. 2012. During this decline, the daily RSI reading has kissed 30, held under 60 for the most part, and now below 30. It is still held under 60, so the bearish momentum shown is still intact, but the market is consolidating.
Rising trendline: Gold price is consolidating as it tests a rising trendline that comes off an ascending triangle that started around the beginning of May. It is also consolidating around the 200-day SMA. In the big picture, Gold has been directionless since the first correction swing down from the record high of 1920.80 down to about 1532.50. Prices have ranged since then roughly between 1785 and 1522.
Downside: Looking at the most proximal scenario if it happens, the bearish break will have a support area ahead around 1630. Below this area, we have the area of supply around 1522 as the next key support. A break below that would be a major game changer.
To the upside, a break above 1700 should clear above the falling channel and could open up the next resistance pivot near 1750.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.