After the explosive bull rally from 1236 low, gold showed a weakness pressing beyond 1244 high with a soft upward momentum this week. Yesterday, the precious metal was sold heavily with $17 loss and closed at 1226 low.
Technically we can notice the following on the chart:
1- Yesterday's candle is bearish inverted hammer engulfing all candles since Monday.
2- Gold has closed below 5-EMA, currently testing 10-EMA at 1224. (Daily)
3- Gold broke the rising channel black channel downward.
4- Daily RSI has reached 74 level, oversold market.
5- On W1, gold should test 5-EMA at 1310+.
6- On daily chart, gold is demonstrating head and shoulders pattern, and we expect some short daily sideways to complete the right shoulder and any corrections should be contained in yesterday's low edge candle or upper half.
7- On H1 time frame, the fast acceleration drop was significant and has washed the lower edges of previous candles.
Combining all the above, it is highly expected that gold has triggered a bear trend but only a close below 1322 will confirm that.
Resistance: 1334.8, 1338.00-1339.60
Support: 1326.10, 1322.40*
Trend: Sideways / Up
Trend reversal price: 1322.40*
Comment: Overall the market remains in a bull trend, but yesterday's back off hurts upside forces and leaves near term action vulnerable to setbacks into the 1320's. A close under 1322.40* highlights a short term topping turnover and opens up potential towards 1300. A push back over 1340.00+ is needed to rekindle bull trending to reach for 1352.00.