Gold plunged in the last hours and now is back in a strong support area. Actually, it's almost to reach a confluence area. Technically, the yellow metal invalidated further growth and signaled a potential deeper drop.
Surprisingly or not, the price of gold dropped even if the US Dollar has lost significant ground versus its rivals. Staying above the immediate support levels could bring a new upside movement.
XAU/USD At Support!
Gold failed once again to stabilize above the R1 (1804.79) signaling that the bulls are already exhausted. It's located above the 50% retracement level and above the ascending pitchfork's median line (ml).
Dropping and closing below these levels could indicate a potential drop towards the weekly pivot point (1777.66). Technically, its failure to reach the upper median line (uml) could bring a deeper drop.
Only staying above the confluence area formed at the intersection between the median line (ml) with the 50% retracement level may announce a new upside momentum. Registering a false breakdow with great separation or a major bullish engulfing on this support zone brings a long opportunity.
Forecast!
Gold hovers above strong support levels. Any bullish pattern printed here could indicate potential growth. It could increase if the USD resumes its depreciation started today.
The material has been provided by InstaForex Company - www.instaforex.com