Gold pulled back yesterday as the dollar strengthened and the price could not break above the short-term resistance at $1,297 we mentioned yesterday. The price is heading lower towards the $1,270 support where we could see prices reverse upwards again.
Black line - support
Gold continues to trade above the Kumo (cloud). The stochastic has entered oversold levels so any time now we could see a bounce. $1,250 is the next support after $1,270. As I mentioned in the previous posts, my upside target is at $1,325 but risk reward is not in favor of the bulls.
Gold is above the weekly cloud confirming the longer-term bullish reversal. The stochastic and RSI are giving bearish divergence signals. Bulls need to be very cautious. Weekly support is at $1,255. I believe that if it has not topped already, gold will make a new high near $1,325 and then pull back to $1,190-$1,150.
The material has been provided by InstaForex Company - www.instaforex.com