Gold traded lower on Thursday after it hit resistance slightly below the 1237 hurdle, defined by the trough of the 12th of December 2017, as well as the lows of the 3rd and 13th of July this year. The precious metal continued drifting lower during the European morning Friday, and now looks to be heading towards the 1211 support hurdle, marked by the low of the 19th of the month. The price structure on the daily chart continues to be of lower peaks and lower troughs below the downtrend line drawn from the peak of the 11th of April and thus, we still see a negative near-term picture.
If the bears stay in the driver’s seat and manage to overcome the 1211 hurdle, then we may see them aiming for the 1197 zone, near the low of the 15th of March 2017. Another dip below 1197 could carry more bearish extensions, perhaps towards our next support territory of 1184.
Turning attention to our daily momentum studies, we see that the RSI turned down and slid back near its 30 line, while the MACD remains well within its negative territory. Both these indicators detect downside momentum. However, there is positive divergence between both the indicators and the price action, while the MACD, although below zero, stands slightly above its trigger line. So, having those technical signs in mind, we would stay cautious of a possible corrective bounce, perhaps for another test near 1237.
Now, if the 1237 barrier fails to stop the price from rising further, we may experience extensions towards the crossroads of the 1261 resistance and the downtrend line taken from the high of the 11th of April. That said, the yellow metal would still be trading below the trendline and thus, we would treat such a recovery as a corrective phase. We would like to see a decisive close above 1261 before we start examining the case of a reversal to the upside. Such a break could initially aim for the 1273 level, the break of which could pave the way towards our next resistance territory of 1290.
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