By Dan Eduard – Gold prices have been rising substantially over the last few weeks, as the commodity is being seen more and more as a safe haven while the pace of the global economic recovery is being questioned. As we will show through a number of technical indicators, prices may have reached a saturation point, meaning a downward correction could take place.
For our analysis, we will be looking at the 8-hour chart for gold, provided by Forexyard. The technical indicators being used are the Relative Strength Index (RSI), the Williams Percent Range and the MACD.
1. As can be seen, the RSI is currently trading right above the upper resistance line, at the 70 level. This is typically seen as a sign that gold is in overbought territory and a bearish correction is likely to take place.
2. The Williams Percent Range is trading right at the -20 level. Anything above this level is considered to be overbought, and is usually considered to be a sign of impending downward movement.
3. The MACD has formed a cross well above the moving signal in a clear indication that the commodity has reached a saturation point in the market. Traders can expect downward movement, as investors are likely to begin selling off their positions.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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