Being in an overall bearish structure, gold has been quite since the week start. Market is ranging in a downtrend which means, it has the potential to break this range and further fuel down towards the daily support. We are looking at 1H for this current setup. This means, market has formed lower lows and lower highs and is bound in a range. Market has started to retrace back and continued making a bearish leg. On the other hand, once the market breaks the support level, we will wait for the retracement towards the support turn resistance.

The resistance trendline has been tested twice. The third test rejected the price action and moved the market down. With that, we also have a minor trendline which has been broken out for sells. Until market breaks the range, we will not consider any other factor for shorts.

The golden retracement level is in confluence at the 75-78% and is in confluence with the resistance level. Therefore, this area tends to be a strong foothold for the market to continue moving down.

The EMA 50 is hawkish, bearing a downtrend. Once the market pulls up to retrace, we may have the EMA 50 retest the price action as well. This will add another technical factor towards the short sell. In this scenario, we do not see the prices potentially tapping and rejecting the EMA. 

RSI is bearish at 51. The window towards the downside is still open and market has the potential to further dip down towards the over sold region. With this, we may want to wait for the market to retrace back in order to neutralize the RSI at 50. Only then it makes sense to take the short. If market breaks the support and heads down, we will see the RSI response in that case.

Gold made a double top

Jul 25 2022