The price of gold is correcting lower and may retest $1600 support area again. Despite the strong Bullish trend, Bears are currently taking over the current price action. Let’s check gold technical analysis for more levels and insights.
February 26, 2020, | AtoZMarkets – Gold has been quite impressive with the recent Bearish momentum after rejecting from $1688 area. As the week opened with a Bullish gap, the price managed to create a recent record high but could not sustain the Bullish momentum as required.
Gold is considered as a safe-haven investment due to the current global economic crisis due to the Coronavirus issue. Gold managed to sustain consistent Bullish momentum recently, which led the price to reside around $1688 area. This week, the Gold price started with a Bullish gap which enhanced the Bullish momentum further pushing the price to a record high point.
As per analysts, the current Bullish pressure is a result of investors’ fear over the Coronavirus issue. It may fade as the Coronavirus issue finds a reliable solution and investors get back to other markets. The U.S. Stocks market is struggling due to global economic impact and seen a significant downturn in the Dow and S&P500 since last year. The Stock market crash and rising Gold price is no surprise as they are negatively correlated with each other.
Gold drops lower and may find support at $1600
Gold is currently consolidating around $1650 area after having an impulsive Bearish run recently. As the price rejected from $1688 area, Bears managed to be consistent with the downward pressure which may continue further.
image: Gold 1 Hour Chart
According to the 1-Hour chart, the price already breached below the dynamic level 20 EMA, Tenkan and Kijun line. After the recent gap higher, the price did push higher but recently covered it well with intense Bearish pressure. As covering up a Gap is an indication of a specific reversal, Gold may head towards $1600 again.
Gold bulls target $1700 as potential price level
The price recently breaking below the dynamic level got confluence from the MACD line Bearish Crossover above 0.00 level. The Chikou Span (Green Line) is residing quite near to the candles which if broken below, will add to the Bearish confluence.
Though the price may consolidate and push higher from the current price position, in the long-term context, it would not be quite fruitful for the Bulls. So, absolute Bearish pressure towards $1600 may lead to further addition of the Bullish positions resulting in a stronger Bullish pressure to reach the target area of $1700.
To conclude, Gold may retrace and correct lower towards $1600 in the coming hours. Though the pressure is currently Bearish but long-term Bullish target is still at $1700.