Gold Day chart 4/19/2013 7:45AM EDT
3-day range: After the sharp slide to begin the current week, gold has been consolidating. The 4/16 session candle set up a range that held price action through the 4/18 session. As we wrap up the week, the 4/19 session is seeing the market push gold up above the 1400 handle, as well as above the 3-day range, suggesting some further relief rally.
Pullback: In the 4H chart, you can see gold setting up a near-term bottom. A range breakout projection targets about 1495. Keep in mind any bullish outlook should be limited to the very short-term and probably should be limited below the 1500 psychological handle after such dramatic plunge recently.
Momentum: In the 4H chart the RSI has tagged 30, held below 60 and dipped below 30 again. If the bearish momentum in this time-frame is to be maintained the RSI should not push above 60. Even if it does not result in bearish continuation, but rather a larger consolidation zone let’s say between 1500 and 1320, we should consider probable resistance if the 4H RSI tests 60.
Central pivot: The range or “bottom” put in place has a central pivot around 1360. If the market can’t hold above 1400 in the next couple of sessions, and push back below 1360, and the 4H RSI comes back below 40, we are likely in a bearish continuation, at least to first test the 1320-1335 range support area.
Breakdown: A break below 1320 could open up another 80 pips or so downwards (width of the range), but we should also monitor the 1308.15 2011-low, and the 1300 psychological handle.
Gold 4Hchart 4/19/2013 7:57AM EDT
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.