Gold sinks to $1237; set for pullback

Gold yesterday closed with a huge bearish engulfing candle on daily chart which clearly shows that bulls are losing grounds after Fed tapering decision. The precious metal slumped $30 per ounce on Thursday to $1237, however then retreated somewhat to close at $1243.

At the moment of writing in Asian session yellow metal is being traded at $1243. Resistance can be noted around $1248, $1253 and then $1255 these are 100 MA (H4) 55 MA (H4) and 76% fib levels respectively.

Gold sinks to 37; set for pullback

On downside, gold may find support at $1233 which is 200 MA at four-hour chart and 55 DMA ahead of $1230 that is a crucial 50% fib level of recent move. A break and daily close below $1230 will be very bearish in medium term and may threaten $1219. At the moment Commodity Channel Index (CCI) is already in oversold territory and Relative Strength Index (RSI) is standing just above the oversold zone on four-hour chart. MACD has also started showing some signs of improvement, all these factors point out that a bullish reversal might be in play very soon. Furthermore, the metal is about to complete its downward wave because swing low of previous wave is sitting around $1231.

 Today some important economic reports about the US economy are due in the US session:

  • Employment Cost Index (Q4)
  • Personal Income (MoM) for December
  • Consumer Consumption Reports for December (YoY) & (MoM)
  • Personal Spending (Dec)
  • Chicago Purchasing Managers Index (Jan)
  • Reuters Michigan Consumer Sentiment Index (Jan)

Earlier a commerce department report showed yesterday that the US economy grew at 3.2% last year which was in accordance with median projection by different analysts. The report also revealed an increase in personal consumption expenditures by 1.1% which was the highest level in more than three years, figures show that economy has started gearing up.'
Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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