Gold back tests break out area

Relevance up to 17:00 UTC+00

Gold price could not break above the $1,950 resistance and is now pulling back to back test the break out area. Previous resistance at $1,900 is now support. This back test could provide a bullish signal if price bounces off $1,900 and moves to higher highs, but could also prove that this break out was a fake one.

Green line -resistance broken now support

Red line - support trend line

Blue rectangle- horizontal resistance

Gold price is under pressure. After a sharp rally to $1,950, price is swiftly turning lower towards the break out area. Bulls remain in control of the trend as long as price holds above the red trend line support. A back test of the break out area and green trend line is not unusual price action. However after such a back test bulls will need to step in and provide a strong bounce off the support area. It is important to see where Gold price ends this week.

This week's candle has a long upper tail. If at the end of the week the long upper tail remains, then bulls should be worried as they will be losing the fight to the bears. Such a candlestick pattern is a bearish sign. So bulls need to push price higher and end the week as closer to $1,950 as they can. Respecting $1,900-$1,890 is key for the bullish scenario.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Alexandros Yfantis,
Analytical expert
InstaForex Group © 2007-2021

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