FX.co ★ Gold price breaks below short-term support

Gold price is trading at $1,890 and has broken below the short-term support trend line. Price bounced towards $1,906 but bulls were not strong enough to continue the upward move to new highs. A lower high has been formed and with price breaking below the support trend line, our expectation for a deeper pull back towards $1,860-50 seems more probable now.

Blue lines -bullish channel

Red line - short-term support trend line

Gold price remains inside the bullish channel but price action has given us two bearish warnings. The first warning was the bearish RSI divergence that we talked about in previous posts. Today we got the second warning when price broke below the red support trend line. As we mentioned in previous posts at current levels we prefer to be neutral if not bearish. The upside potential is very limited and the most probable scenario is a pull back towards the lower channel boundary.