- Gold extends recovery for the second day in a row.
- Bullish pennant breakout confirmed on the 1 hour chart.
- The RSI on the 1 hour chart is approaching the overbought territory.
Gold’s recovery from the five-month lows of $ 1,765 gains additional traction on Wednesday, as the bulls prepare for a test of the previous critical support, now turned into resistance at $ 1,850.
The technical setup favors the bulls as price action has confirmed a breakout of the bullish pennant on the 1-hour chart. The validation has come after the yellow metal closed above the downtrend line resistance at $ 1,815.
The price has broken above the 200 hourly moving average at $ 1,819, offering additional enthusiasm to the XAU / USD bulls after the big breakout.
The RSI is moving into the overbought territory, currently at 74, implying that the price could pull back to test the 200 hourly SMA before resuming its upward move towards the $ 1,850 level.
A breakdown of the 200 hourly SMA could expose the pattern’s resistance, now support at $ 1,815. The next target on the downside is seen at the 21-hour SMA at $ 1,812.
Recovery momentum remains intact as long as the precious metal remains above the $ 1,800 level.
Gold 1 hour chart
Gold technical levels
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