- Gold maintained its strongly offered tone during the first North American session.
- The setup supports the prospects for an eventual break below the $ 1900 support area.
- The oversold conditions on hourly charts warrant some caution for bearish traders.
Gold extended last week’s rejection slide from short-term downtrend line resistance and fell to six-week lows during the first North American session. The bears now expect a follow-on selling below strong horizontal support near the $ 1905- $ 1900 region.
Meanwhile, the combination of a descending trend line resistance and horizontal support formed the formation of a descending triangle. Therefore, a convincing break below the $ 1900 level will mark a further bearish breakout and pave the way for further weakness.
Meanwhile, the technical indicators on the daily chart have started to move into negative territory and add credibility to the bearish outlook. However, the oscillators on the hourly charts are already showing oversold conditions and warrant some caution.
Therefore, it will be prudent to wait for a sustained breakout of the aforementioned horizontal support before positioning for any other short-term depreciation moves. The commodity could then accelerate the decline towards the support of the August monthly lows near the $ 1963-62 region.
On the other hand, any recovery attempt could now be seen as an opportunity to initiate new bearish positions. This, in turn, should contain any additional gains for the commodity near a support break point of the one-week trading range, around the $ 1937-38 region.
4 hour gold chart
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Technical levels to follow
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