XAU/USD traded lower today, breaking back below the upside support line taken from the low of August 9th. In our view, this darkens a bit the outlook again and increases the chances for the bears to stay in the driver’s seat for a while more.
If indeed they are willing to stay in control, we could see them pushing towards the 1783 zone, marked by the low of January 28th, and slightly below the low of May 16th. A break lower would confirm a forthcoming lower low and could target the low of December 15th, at 1754, or the low of September 29th, at 1722. If the bears are not willing to stop there either, then we could see them pushing towards the low of August 9th, at 1685.
Shifting attention to our daily oscillators, we see that the RSI hit resistance near 50 and turned down, while the MACD, although above its trigger line, lies within the negative territory and shows signs of topping. Both indicators suggest that the metal is gaining downside speed again, which adds to the case of some further near-term declines.
We will start reexamining the bullish case upon a break back above the 1870 zone, marked by the high of May 24th. This may signal the return back above the aforementioned upside line and could initially pave the way towards the 1910/15 zone, which provided strong support between March 15th and April 5th, and was also tested as a resistance on May 5th. If that zone doesn’t hold, then a break higher could target the 1965 barrier, marked by the high of March 24th, or even the round figure of 2000, near the high of April 18th.
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