Hello traders! We can witness a very interesting price action on Gold. XAU/USD has reached a 7-Year high on February 24 while hitting $1689. This was quite a substantial rally, which obviously must have been followed by a correction down.
After reaching the high, price has dropped sharply and Gold lost to USD 7.48% when tested $1563 low on February 28. While moving south, price broke below the 200 Exponential Moving Average, which can be a confirmation of further price decline. Just recently, on a wave up, Gold rejected 38.2% Fibonacci resistance, which corresponds to the resistance formed back on January 8. All in all, Gold does look very bearish at this point based on 4H chart analysis.
On the 1H chart, price broke below the uptrend trendline and has reached the lower trendline of the extended descending channel. Overall, XAU/USD is printing lower lows and lower highs and currently, we might witness a short consolidation phase before the next wave down will occur. While the price is below the $1611 resistance, Gold will continue to be under selling pressure and bears will dominate. The downside target is seen at 161.8% Fibonacci retracement level applied to the most recent corrective wave up. This is $1533, which also corresponds to the previously established low, back on January 14.
Bias: Bearish while below $1611
Potential Resistance Zone: $1600-1611
Potential Targets: $1533
Have a profitable trading!