Gold prices dropped yesterday after the positive report of ISM Services PMI. Gold hits rock bottom after expanding towards $1,830 to $1,835 price area. Will the bears taking over the market again? What are the charts and technical indicators are saying? Read more to find further insights into today’s XAU/USD Technical Analysis.
August 5, 2021, | AtoZ Markets – Gold is currently trading around $1,812 price area and trying to recover higher after a sharp drop. The price is still residing inside the range of $1,790 to $1,835 price area. However, the bulls are strongly trying to hold the price over $1,805 to $1,810 support area. As per the current price action context, the price may face strong resistance at the dynamic level of 20 EMA on the intraday chart.
Moreover, the ISM Services PMI enrolled 64.1%, a 4% increment contrasted with the June figure of 60.1%. This is the most elevated reading since the commencement of the ISM Services PMI in 2008. This perusing shows the administration area developed in the fourteenth continuous month following two months of compression and 122 months of development before that.
Gold Hits Rock Bottom as the Dollar Index Climbed
XAU/USD is currently residing near $1,812 price area and trying to climb upside. However, the dynamic level of 20 EMA is still holding the price as strong support on the daily chart.
Image: Gold 4 Hour Chart
According to the 4-hour chart, Gold hits rock bottom and currently trading around $1,812 price area. As per the current scenario, if the price can have an impulsive bullish candle close above the dynamic level of 20 EMA, the price may recover higher towards $1,830 to $1,835 resistance area again in the coming days. On the contrary, if the price rejects the dynamic level and had an impulsive bearish candle close below $1,810 to $1,805 price area, the bears may push the price down towards $1,795 to $1,790 price area in the process.
In addition, the dynamic level of 20 EMA is currently residing near the price, which may work as strong support if the price can have a 4-hour bullish candle close above it. On the other hand, it may act as strong resistance if the price can have a bearish candle close below it. Along with this, the MACD lines are currently residing near the 0.00 level and may have a bullish crossover. Besides, the histogram has created a bullish divergence. Both indicate that the bulls may continue further upside in the days ahead.
XAU May Continue Higher
According to the daily chart, Gold is pushing higher after hitting rock bottom. As per the current price action, if the price can have an impulsive daily bullish candle close above $1,805 to $1,810 support level, the bulls may push the price upward towards $1,830 to $1,835 price area as a first target. The second target will be $1,850 to $1,860 price area if the price can break above $1,830 to $1,835 resistance area in the coming days.
Image: Gold Daily Chart
Furthermore, the dynamic level of 20 EMA is currently residing below the price. Along with the Kijun line and the Tenkan line. So, the dynamic level may work as strong support to push the price upside. Besides, the Kijun line and the Tenkan line may work as a confluence of the dynamic level in the process.
To conclude, after a sharp drop, the bulls found support around $1,805 to $1,810 price area and trying to climb higher. An impulsive daily close is needed to identify the definite momentum in the coming days.