Technical analysis of gold for January 17, 2017

As expected, gold is making higher highs this morning as the price remains inside the bullish channel. There are several warning signs as the RSI is diverging which justifies a pullback in the short term. This pullback will be confirmed once the price breaks below $1,193.

Red lines - bullish channel

Black line - divergence

Gold price is trading above both the Tenkan- and Kijun-sen (red and yellow line indicators). Trend remains bullish in the short term. Price has reached our target at $1,200-$1,220 which acts as a key medium-term resistance. I expect a rejection from this area as there are also bearish divergence signs on the 4 hour chart.

On a weekly basis, the gold price reached the lower boundary of the Kumo cloud as was initially expected. The oscillators are just turning upwards and this is a bullish long-term sign. Gold may find the current resistance too strong to be broken and might pull back for a couple of weeks. Bulls need to be cautious.The material has been provided by InstaForex Company - www.instaforex.com