XAU/USD traded higher today after it hit support near the 1475 zone, and at the time of writing, it is testing once again as a resistance the 1485 zone, which acted as a strong support from August 13th until September 30th, when it was broken to the downside. The precious metal continues to trade below all three of our moving averages, which suggests that, even if the price corrects a bit higher, the bears may have not said their last word.
A break above back above 1485 may signal that there is ample room for the upside correction to continue for a while more. However, as long as such a recovery stays limited below the 1503 territory, we would still see decent chances for the bears to jump back into the action and drive the price back below 1485. Such a dip may aim for another test near 1475, the break of which could carry extensions towards yesterday’s low of 1459.
Taking a look at our short-term oscillators, we see that the RSI lies below 50, but points up, while the MACD, although negative, lies above its trigger line and points north as well. These indicators suggest that the metal has run out of downside momentum at the moment and that’s why we see the case for some further recovery before, and if, the bears decide to shoot again.
In order to abandon the bearish case, we would like to see a break above the 1513 hurdle, marked by the high of September 26th. Such a break may allow advances towards the 1526 zone, the break of which could pave the way towards the highs of September 24th and 25th, at around 1536.
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