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Technical Analysis – Gold rotates near key support trendline

Technical Analysis – Gold rotates near key support trendline

Gold changed direction to the upside in the four-hour chart after securing another strong foothold around 1,938 and near the ascending trendline drawn from November 2022.

The precious metal rose as high as 1,974 before giving up some ground, though there is potential for another test near that peak as the RSI and the MACD have not exited the bullish area yet. Nevertheless, some caution is warranted given the sideways trajectory in the aforementioned indicators and the negative slope in the stochastic oscillator.

A close above 1,966 could initially test the 1,974 high ahead of the 1,980 resistance. If the latter proves fragile, the recovery may continue towards the 200-period simple moving average (SMA) at 1,991. A break higher would clear the way towards the 2,000 mark, while the 2,015 zone, where the broken support trendline is placed, could be a tougher obstacle.

Alternatively, a downside reversal could immediately halt around the 20-period SMA at 1,954. Breaking lower, the bears will head again for the ascending trendline seen around 1,943, while a significant move below the 1,938 base could squeeze the price into the 1,910-1,900 zone. The descending line from March 2023 is adding extra importance to that region.

In brief, the yellow metal is looking neutral-to-bullish in the very short-term picture. A close above 1,966 could put the price on recovery mode again, while a drop below the 20-day SMA and the 1,954 number may generate additional losses.

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