Earlier today, gold took a look above the 100 hour moving average at the 1197.50 currently (blue line in the chart below), but could not sustain the rally higher. On the move higher, the price also moved above the 1200 level, only to have the move fail above this natural support resistance level as well (see chart below).
Gold tumbles below 1200/100 hour MA (blue line).
The subsequent fall back below the 100 hour moving average (blue line in the chart above), gave traders a level to lean against to define and limit their trading risk. In the last hour or so, the price has tumbled further – falling below the 50% retracement level of the move up from the December low at the 1190.42 level (see chart above). It also fell below the low price from last week’s trading at 1183. This level will now be eyed as close resistance in trading today.
There is some intraday support which is trying to hold. The 61.8% retracement of the same move up from the December low the 1179.15 level is finding some buying interest. The low has come in at 1179.21 so far. Look for traders to use this level to define the short term buying risk. Stay above and there could be a rebound with a move above the 1183 level, next targeting the 50% at 1190.42. Move below the 61.8% level – or finding sellers against the 1183 area (look for it on the first test) – would keep the sellers in firm control with a probe to new lows likely.
Gold is being pushed and pulled by various forces. Last week, the stock market weakness, helped find some support. However, the overall dollar strength, and the recent plunge in oil prices is also lowering the global inflation picture even more – dampening the inflation hedge component of gold. That should keep the pressure on the precious metal going forward.
Looking at the daily chart, gold held against the 100 day MA and 50% of the move down from the July 2014 high earlier this month. The inability to get and stay above these key technical levels, are more bearish. The action today, is also taking the price below the low from October 6 at the 1182.93 level This increases the importance of this level as a short term resistance level.
Gold on the daily chart is showing more negative technicals
PS Liquidity conditions are light. That can influence flows. So be aware.
