Gold remains guided by the 55-hour SMA for the second consecutive session. As a result, this moving average has pushed the rate to a new 2018 low and closer to the bottom boundary of a two-month descending channel and the monthly R2 at 1,255.00.
Technical indicators on the 1H and 4H time-frames being located in the strongly oversold territory should be an early indication of a soon change in market sentiment. It is not expected that the channel line is breached, as bulls should start to normalise the rate, especially following the rapid decline which began last Friday.
In terms of resistance, the yellow metal faces the 55– and 100-hour SMAs and the monthly S1 at 1.280.00. In case this cluster is surpassed, Gold should go for a test of the breached channel line and the 200-hour SMA circa 1.2890.00
