By Yan Petters – Gold finished last week’s session with an extraordinary bullish move which took the metal commodity as high as $1,398 an ounce. At the moment, many analysts claim that gold is about to breach the $1,400. However, as the 4-hour chart shows us, a bearish correction might take place beforehand.
• The chart below is the spot gold 4-hour chart by ForexYard.
• It can be seen that as long as gold was trading above the Bollinger Bands, the bullish momentum proceeded. However, once gold dropped below the higher band, a correction of gains took place. As a result gold dropped to $1,386 an ounce.
• At the moment, the Slow Stochastic has completed a bearish cross, suggesting that further bearishness might be impending.
• The RSI is pointing down as well, yet it is still trading above the 70-line. If the RSI will drop below the 70-line, it might validate the extension of the current bearish move.
• The next support levels are located at the $1,386, $1,373 and $1,362 levels.
• The nest resistant level is found at the $1,400 level.
• Traders should take under consideration that once the bearish correction is completed – gold is likely bounce back up. And once gold breaches the $1,400 resistant level, the psychological effect is likely to boost gold prices further, with potential to reach $1,410 and even $1,420 an ounce.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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