Gold traded higher on Tuesday, after it hit the crossroads of the 1237 support and the long-term upside support line drawn from back at the low of December 2015. On the daily chart, the price structure remains of lower peaks and lower troughs below the tentative downtrend line taken from the peak of the 11th of April, which keeps the short-term downtrend intact. That said, bearing in mind that the precious metal rebounded today from the aforementioned long-term upside line, we would stay sidelined for now.
We would like to see a clear dip below the long-term line, or even better, below the 1230 support territory before we get confident on the continuation of the prevailing short-term downtrend. Such a dip could set the stage for extensions towards the 1207 zone, slightly above the low of the 10th of July 2017.
Looking at our daily oscillators, we see that the RSI bottomed within its oversold territory and now looks able to move back above 30, while the MACD, although below both its zero and trigger lines, shows signs that it could start bottoming as well. These indicators suggest that some more recovery may be in the works for now.
A break above 1261 could confirm the case of a larger recovery in the yellow metal and could open the path towards the 1273 resistance, or the short-term tentative downtrend line taken from the peak of the 11th of April. That said, even if this is the case, we would still see a decent chance for the bears to jump back into the game from below that line.
We would like to see a decisive close above 1290 before we start examining whether the outlook has turned bullish. Such a break could pave the way towards the next key area of resistance, at around 1307. If that zone does not prove strong enough to prevent the bulls from driving the battle higher, then we may experience extensions towards the 1325 zone, marked by the peak of the 11th of May.
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