FX.co ★ Technical analysis of Gold for May 4, 2016

Gold pulled back yesterday as the dollar strengthened and the price could not break above the short-term resistance at $1,297 we mentioned yesterday. The price is heading lower towards the $1,270 support where we could see prices reverse upwards again.

Black line - support

Gold continues to trade above the Kumo (cloud). The stochastic has entered oversold levels so any time now we could see a bounce. $1,250 is the next support after $1,270. As I mentioned in the previous posts, my upside target is at $1,325 but risk reward is not in favor of the bulls.

Gold is above the weekly cloud confirming the longer-term bullish reversal. The stochastic and RSI are giving bearish divergence signals. Bulls need to be very cautious. Weekly support is at $1,255. I believe that if it has not topped already, gold will make a new high near $1,325 and then pull back to $1,190-$1,150.