In our previous article, we suggested weakness in the XAUUSD daily chart. The below left shows the daily gold heikin ashi chart. Heiken ashi candles are trend-following indicators. In this regard, there is a big red movement down into our area of weakness between the lower blue and lower red bands. We draw attention to the daily stochastic which is positioned in the lower quintile (blue rectangle). Interestingly, the last heiken ashi candle is blue - we wonder if this is the proverbial "rally in a downtrend?" As such, we consider XAUUSD with interest. If the daily stochastic remains below 20, there is a good chance that the precious metal remains under pressure. On the right, we study the short-term H1 timeframe. Price is at the central pivot support and is a key level. If it fails to hold, XAUUSD's indicators are threatening bearishness. The EMAs have crossed down (aqua ellipse) and the RSI has dipped to the bearish side of 50. Our attention is now on the stochastic and the central pivot. Given the daily weakness, if the central pivot does not hold, the hourly stochastic may very well drop into its lower quintile area (aqua arrow). If so, pressure is being exerted on the precious metal and if the stochastic remains suppressed, gold weakness may indeed manifest further.
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Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.