GOLD is the rally in danger ?

GOLD

In the last post about gold we learnt about the –ve divergence developing on the charts, effects of which can be seen in last few days. Gold has fallen of from the highs of 1265 breaking many crucial supports like 1225 and 1200 in the process.

Going forward it looks like gold is going to test its support areas of 1175-1165$, which are important ones on the candlesticks, also the 100 DMA lies between 1175 and 1165. This confluence of support is likely to be tested by bears in coming days.

Whether this dip is a buying opportunity or not? Would depend on whether gold bounces above 1200 and then above 1225$. Only then the bounce would be meaningful and traders can look forward to a meaningful follow-up to the bounce. However if gold falls off after getting resisted near 1225-30  and breaks 1165 on the lower side then the rally in gold will be in danger and it can go down to seek lower levels.

Going forward the key price levels to watch on gold are 1> “1165” below 1165 gold can slide up to 1140 and  then up to 1120.2> “1225” if gold rises above this level with good volume then bulls will be back in business and will try to test the recent all time highs once again.

For traders who have or are looking to buy this dip, 1165 or 1140 can serve as a stop loss, but the most important thing for bulls is for gold to bounce above 1225.

For traders who are short 1225 can be the stop loss.