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From a technical point of view, there are lots of reasons for the price drop experienced by gold yesterday. Today, the yellow metal needs to hold the $1693.78 level to avoid bigger falls, Rajan Dhall from FXStreet reports.

Key quotes 

“There was a divergence on the hourly chart. The price made a higher high wave while the Relative Strength Index signal line made a lower high wave. This is often a signal that a move higher could be running out of steam and in this case, it worked well.” 

“Gold dipped back below the 55 Exponential Moving Average and is now testing the 200 Simple Moving Average. The MACD histogram is also crossing to the downside so on the hourly chart there seems to be lots of bearish signals.” 

“The key level is the low point on the hourly chart of $1693.78. If this level breaks it could be a sign that the price could be heading to lower levels on the higher timeframes.”