FX.co ★ GOLD Drops On USD Strenght!

The gold price has extended the bearish momentum as the USD has managed to stay higher after the FED decision to cut the interest rate and to add a QE program. It has dropped as much as $1,451.15, registering a 6.14% drop in yesterday's session, but it has closed way above the $1,484 static support.

The price has opened with a gap down today, it is trading near the $1,484 downside obstacle. Rejection from this support area could signal a potential rebound on the short term. Gold remains under selling pressure, that's why we need to wait for a pattern that will validate another leg higher.

Gold has ignored the inside sliding line (SL) of the descending pitchfork, I said in yesterday's analysis that the price could drop towards the median line (ML) if it stays below the $1,555 former support (support has turned into resistance).

You can notice that the price has reached the median line (ML) and the weekly S1 (1455) level, but it has closed much higher signaling that the demand remains high around the $1,484 level.

A rebound could appear if the yellow metal stabilizes above the $1,484 static support and if it stays away from the median line (ML). However, gold could drop further if the USDX resumes the upside movement and if it forces the dollar to appreciate versus the major currencies.

• TRADING RECOMMENDATIONS

Gold is under selling pressure right now, I believe that only a consolidation here above the $1,484 level, or a rejection from this level could signal a potential rebound. The support is seen at the median line (ML) of the descending pitchfork and at the S1 ($1,455) level.

The price could come back down to pressure the mentioned support levels, another false breakdown, or a reversal pattern could signal a bullish momentum. The gold price is into an uptrend, but a valid breakdown below the S1 ($1,455) and below the median line (ML), another lower low, will validate a larger correction and a potential reversal.