With continued vulnerability to the downside seen following its break below its medium-term rising trendline on Tuesday, the risk of further nearer-term weakness in gold is now expected.
In such a case, the 1,325.30 level will be targeted initially with a violation of there aiming at the 1,315.60 level, its Oct. 18, 2010 low. That level is within the vicinity of its psychological level at 1,300.00 where we believe a halt is likely to occur and turn the commodity higher again.
Its daily RSI is bearish, supporting this view. Alternatively, the commodity will have to decisively break and close above the 1,424.30 level to bring further gains towards the 1,450.00 level. Beyond there, it will turn to focus at the 1,500 level.
All in all, the commodity is setting up for more corrective weakness having broken below its rising trendline.
Mohammed Isah is a technical strategist and head of research at FXTechstrategy.com, a technical-research Web site. He has been trading and analyzing the foreign exchange market for the past seven years. He formerly traded stocks before crossing over to the forex market, where he worked for FXInstructor LLC as a technical analyst and head of research before joining FXTechstrategy.com. He has written extensively on the forex market and technical analysis and his articles have been featured in The Technical Analyst Magazine, The Forex Journal Magazine, The International Business Times and FXstreet.com. At FXTechstrategy.com, he writes daily, weekly and long-term technical commentaries on currencies and commodities, which are offered to its clients. He also produces
for his subscribers. He provides full coverage of the forex market with specific focus on G10 currencies as well as the commodities markets, with focus on five key commodities.