- Gold saw some selling for the second straight session on Wednesday.
- The decline appears to have confirmed a break below a bearish pennant pattern.
- The scenario looks set for a pullback towards the $ 1,950-48 support test.
Gold extended this week’s rejection drop from close to $ 1,900 and remained depressed for a second straight session on Wednesday. Intraday selling bias accelerated during the European session and dragged gold to fresh weekly lows, around the $ 1,863 region in the last hour.
The downward trajectory confirmed a short-term bearish break below a short-term rising trend channel, which constitutes the formation of a bearish continuation pennant chart pattern. With the technical indicators on the hourly / daily charts staying in bearish territory, the XAU / USD now looks vulnerable to further decline.
Momentum could now extend to test horizontal support near the $ 1,850-48 area. Some subsequent selling will be considered a new trigger for bearish traders and will pave the way for a drop towards the intermediate support at $ 1,820-15. The XAU / USD it could eventually drop to the very important 200-day SMA support, or levels below $ 1,800.
On the other hand, immediate resistance is pegged near the $ 1,888-90 region and is closely followed by $ 1,900 before the trend channel barrier around $ 1,910. Only sustained force beyond the aforementioned hurdles will nullify the bearish outlook and trigger some short-term hedging move around the metal.
The XAU / USD could then aim to break above the intermediate resistance zone of $ 1,930-32 and challenge the next big hurdle near the monthly highs en route of the $ 1,952 region near the $ 1,965 area.
4 hour chart
Technical levels
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