According to Bloomberg, hedge funds have never been so pessimistic about gold prices. Managers bet on the further decline. Analysts say gold prices will keep suffering in the short term. However, there are no fundamental factors that can help us to make predictions now. That’s why let’s have a look at the technical side.
Up to now, XAU/USD has been trading at lows of the end of 2016. MAs has been moving down and the Ichimoku cloud signals the further fall of the pair. The next support is at 1,180. In case the pair breaks this level, the further great plunge to 1,125 will be anticipated.
To understand when the reversal point is, it worth to look at the Relative Strength Index. The main idea is that when the index is above 70, the pair is overbought, it’s time to sell. When the index is below 30, the pair is oversold, so it’s time to buy. Up to now, the index is at 30. As a result, we don’t see the strong signal that the pair is oversold. Therefore, the time to buy hasn’t come. As soon as the index is below 30 and other technical indicators such as MAs, candlesticks, MACD signal reversal, traders should open long positions.
Making a conclusion, we can say that the gold market is anticipated to fall further in the near future. However, upside risks exist. Traders should pay attention to the technical indicators that will give a clearer picture of the further direction of the gold prices.
Now having support zone 1188, holding below support zone means 1181 & 1174 easily looking other wise again rise up to resistance level 1202 & 1210...