Search ForexCrunch
  • Gold managed to attract some dip-buying on Monday and refreshed daily tops in the last hour.
  • The technical set-up still favours bearish traders and supports prospects for a further decline.
  • Attempted move up might confront stiff resistance and remain capped near the $1918-19 zone.

Gold reversed an early dip to the $1891 region, or seven-day lows and refreshed daily tops during the mid-European session, albeit lacked any strong follow-through.

The goodish intraday rebound back above the $1900 mark stalled near 200-hour SMA. The mentioned barrier also coincides with a one-month-old ascending trend-line support breakpoint, which should now act as a key pivotal point for intraday traders.

Meanwhile, technical indicators on the 1-hourly chart have again started moving into the positive territory and support prospects for a further move up. However, oscillators on 4-hourly/daily charts maintained their bearish bias and favour bears.

Hence, any subsequent positive move beyond the $1905-06 region (support-turned-resistance) will be seen as an opportunity to initiate fresh bearish positions. This, in turn, should cap the upside for the XAU/USD near the $1918-19 supply zone.

That said, some follow-through buying has the potential to push the precious metal back towards a strong horizontal resistance, around the $1931-33 region. Only a sustained move beyond will negate the near-term bearish bias and pave the way for additional gains.

On the flip side, weakness below the $1890 area, leading to a subsequent breakthrough the 100-day SMA, around the $1883 region, should accelerate the fall towards September monthly swing lows support, around the $1848-49 zone.

XAU/USD 1-hourly chart

fxsoriginal

Technical levels to watch