XAU/USD traded lower this week, after hitting the key resistance barrier of 1834, which stopped the metal from moving higher on July 15th, 29th, and August 4th. Overall, the metal remains below the downside resistance line drawn from the high of August 6th, 2020, and thus, we would treat the recovery started on August 9th, as a corrective move of a broader downtrend.
A clear dip below 1774 will confirm that the latest recovery was just a corrective move and could initially target the low of June 29th, at 1751, where another break could see scope for extensions towards the low of August 11th, at 1724. That level provided support on April 13th as well. If that level is not able to stop the bears either, then we could experience extensions towards the 1683 territory, which provided strong support back in March and now on August 9th.
Looking at our daily oscillators, we see that the RSI turned down and just touched its toe below its 50 line, while the MACD, although slightly above both tis zero and trigger lines, shows signs of topping as well. Both indicators suggest that the latest recovery has run out of steam and increase the chances for the metal to fall more.
On the upside, we would like to see a strong move above 1917 before we start examining whether the bulls have gained full control of the precious metal. The bulls may then get encouraged to push the action towards the high of January 6th, at 1960, the break of which could see scope for extensions towards the high of September 1st, at 1993.
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