Bears continued to take the gold prices lower. This week, the XAU/USD pair has lost more than 40-50 pips. And, even today, the decline rally continued.
During the last few days, the gold markets had undergone severe sell-offs as China announced various measures to mitigate the overall virus impact. China had cut rates and also injected $174 billion into its economy. At this revival point, the stock markets appeared to nudge higher, allowing investors to exit positions from the yellow metal.
The death toll from the coronavirus outbreak has crossed above 490. With more than 25,000 confirmed world cases, the government continues to quarantine people on cruise ships in Japan and Hong Kong.
Greenback bulls seem awakened since the last few sessions. After touching the significant 98.06 resistance level on Jan. 29, the USD Index nosedived into the underlying Kumo cloud. However, quite surprisingly, the US Dollar took advantage of this Kumo Cloud, using it as a strong support region. In its journey to the upper side, the Index also made a breakthrough out of the pivotal 97.68 resistance line. That itself confirmed the resilient nature of the bulls.
Currently, the Greenback was heading to the north, targeting at the previously tested 98.06 resistance level. Hopefully, this time it makes a triumphant move with strong momentum. Needless to mention, such a probable price action might have a negative impact on gold prices.
To be precise, the gold prices have been staying inside the upper Bollinger Bands, keeping the uptrend intact since Dec. 12. Now, finally, the XAU/USD pair has moved below the center line of the Bollinger Bands, invading into the indicator’s lower region. With this vital move, the bears have cemented their steps, triggering a strong downtrend. Also, the Parabolic SAR has just now moved above the XAU/USD pair, signaling the pathway for the gold bears.
The momentum in the Stochastic Oscillator appeared to have dropped significantly, indicating oversold conditions.
As the primary trend appears to be a downtrend, let me look on the downside to spot some significant support halts on the 4H chart. So, on the south side, focus on these immediate support lines:
I can also see a slightly distorted triple top pattern, which is underway completion. The breakage of the initial $1548.46 support, which is acting as a neckline, might immediately charge up the bears.