Gold 4H chart 9:00PM EDT 9/26/2012
The bullish break last Friday (9/21) was quickly rejected, before gold was able to reach 1790.20, 2012-high. The market followed the false breakout with a couple of bearish swings. By the 9/26 session, the market cracked the 1751.80 support and reached below the 1746.95 level, which was a resistance pivot for the previous consolidation seen in the 4H chart.
A pullback during late 9/25 and early 9/27 Asian trading is going to give us a chance to see if the break to the downside can sustain after the break to the upside failed.
Note the 4H RSI testing 40. Since breaking above the declining trendline going back to 2011′s record high, the 4H RSI has remained above 40 and tagged 70, a sign of persistent bullish momentum. Therefore a break below can reflect a significant correction in progress. In this scenario, the next support is around 1724.40, support of the previous consolidation. Below that the 1700 handle could prove to be a tough psychological support to crack.
If the pullback pushes above 1765.50, the 200-hour SMA, and clears above the moving averages, then the break to the downside is suspect and the direction is unclear, but with a bullish bias and therefore refocuses to the 1790.20 2012-high. The 1H RSI reading should also stay under 60, if the bearish momentum is to continue in the short-term during this corrective phase.
Gold 1H chart 9:07PM EDT 9/26/2012
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.Copyright FX Times All rights reserved.
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