Gold created a new lower low at 1,701 on Wednesday after the 20-period simple moving average (SMA) on the four-hour chart proved a tough resistance to overcome.
Despite the weakness in the RSI, the indicator has been printing higher higher and higher lows since the dip in the overbought territory, reducing downside risks in the market. The red Tenkan-sen line also seems to be easing its negative momentum, indicating that the bearish action may be losing steam.
Sellers, however, may not give up if the price finally closes below the 1,707 level, likely driving the price towards the 1,693 barrier, while lower, the area between the 1,682 – 1,671 boundaries could next attract attention if the sell-off gets more legs.
On the upside, the 20-period SMA remains the main target around 1,731. A break above that threshold, and more importantly a bounce above the swing high of 1,740, could power the bullish action towards this week’s peak of 1,760. If the 50-period SMA proves easy to pierce, resistance may run up to 1,785.
Summing up, gold continues to face a bearish short-term bias, and although selling appetite seems to be calming down, the downside pressure may not fade until the price crawls above the 1,740 level.
