- Gold’s Tuesday’s candle indicates seller exhaustion, but lower highs setup still intact.
- Short-term average studies have turned bearish and prices risk falling back to $1,540.
Gold is currently trading at $1,548 per Oz, having clocked a low of $1,536 on Tuesday.
The long wick attached to Tuesday’s candle indicates seller exhaustion, meaning the corrective pullback from the six-year high of $1,611 reached on Jan. 8 has likely ended.
Even so, it is too early to call a bull reversal, as the lower highs pattern is still intact on the 4-hour chart. A move above $1,563 is needed to invalidate the lower highs set up and confirm a bullish revival.
A move above $1,563 may not happen on Wednesday, as the 5- and 10-day averages have produced a bearish crossover and the 5-day average hurdle is proving a tough nut to crack in Asia.
So, despite the bullish divergence of the 4-hour chart MACD, the metal appears on track to re-test $1,540. That said, prices could challenge the 10-day average hurdle at $1,543 before a potential slide to $1,540.