Optimism for gold has started to shine again after the creation of a bullish hammer candlestick on Friday, which followed the strong rebound from the May low of $1,786 an ounce.
The price is currently pushing for a higher close slightly above the $1,810 level, trying to confirm the formation of the bullish green candlestick. Still, some caution is still required given the negative trend of the RSI and MACD, which continue to hover in the bearish zone.
More importantly, the market is setting up a deadly cross between the 50- and 200-day simple moving averages (SMA) after the bearish cross between the 20- and 200-day SMAs last week, suggesting that any upward correction may only be temporary. and part of the initial negative trend.
Nonetheless, if the bullish forces persist, the precious metal will attempt to crawl above the broken support trendline seen at $1,825. If the efforts prove successful, the rally could continue towards the key region of $1,845-$1,855, where the longer-term SMAs and the upper boundary of the downtrend channel are positioned. Higher, the price may face some congestion around the $1,870 barrier before accelerating towards the surface of the short-term rising channel at $1,890.
On the other hand, the $1,786 – $1,777 soil will remain in the spotlight. If it cracks, the downtrend could extend towards the support zone around $1,760, while at the bottom all attention will turn to the 2021 barrier at $1,723.
In summary, gold has charted an encouraging candlestick pattern, signaling a possible rise in price, but the downside risks have not yet completely evaporated. Perhaps a sustainable advance above $1,825 could reduce skepticism and motivate further buying.